Share this article

print logo

Foreclosures boost home sales

The number of Americans who bought previously occupied homes rose in August. But the sales were driven by an increase in foreclosures, a sign that home prices could fall further next year and slow a housing recovery.

The National Association of Realtors said Wednesday that home sales rose 7.7 percent last month to a seasonally adjusted annual rate of 5.03 million homes. That's below the 6 million that economists say is consistent with a healthy housing market.

Last month's pace was slightly ahead of the 4.91 million sold in 2010, the worst sales level in 13 years.

Homes at risk of foreclosure made up 31 percent of sales. That's up from 29 percent in July. Many of the sales went to investors, who are increasingly buying homes priced under $100,000. Sales in that category rose in August, while sales of more expensive homes fell.

At the same time, activity among first-time buyers, who are critical to reviving the housing market, didn't budge. First-time buyers made up only 32 percent of sales, matching the July level. They normally make up 50 percent of home sales in healthy markets.

The Buffalo Niagara Association of Realtors has not yet reported August sales, but July sales rose 18 percent to 848 from 721. Computed on an unadjusted annual basis, that would equal a pace of 10,176 sales for the full year.