HUD Inventory Balloons in One Year
In a report released by HUD, the Federal Housing Administration (FHA) home sales drastically fell in the last quarter of 2010 and the beginning of 2011. An increase of more than 50 percent from the previous year, at the end of February 2011, HUD held 68,801 repossessed single family properties, as indicated in the HUD report. In February 2010 the number of HUD repossessed single family homes was 44,605.
Since reaching 8,893 homes last June, sales of these foreclosed properties had begun to fall, slowly each month until November 2010. REOs sold by HUD in November dropped by 20 percent, from 7,289 in October to 5,817 in November. The total monthly sales were reduced by half in December to just 2,749 homes sold by HUD. In January of 2011 sales continued to fall but only by another 117 homes. HUD home sales increased to 4,221 during the month of February.
With the drop in HUD home sales, the inventory of HUD homes growing, combined with the increasing defaults on FHA insured loans, HUD now carries and inflated supply of REO homes.
Could this be the perfect storm for home buyers who have been sitting on the fence waiting for the right time to purchase a home? Combined with the low interest rates being offered, FHA mortgage loans including the FHA 203k, incentives offered for Maryland first time home buyers and reductions in sale prices this leaves many opportunities for prospective home buyers.
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