Fewer Foreclosures, But No Relief for the Housing Market

Things aren't getting any better for the housing market, but at least they aren't getting any worse.

Realtors sold fewer distressed homes in October, according to a new report, and the overall inventory of foreclosures on the market has been shrinking, easing downward pressure on home prices. Sales of foreclosed homes and short sales fell to 28 percent of all sales in October, according to the latest Realtors Confidence Index survey, down from 30 percent in October and a high of nearly 50 percent in March 2009.

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"In recent months, the problem of distressed real estate sales has improved somewhat, which suggests that additional downward pressure on prices from the growth of distressed real estate sales is currently not occurring," Jed Smith, managing director of quantitative research at the National Association of Realtors, wrote in a post about the survey.

[Read: As HARP 2.0 Heats Up, Beware of Fraud.]

But, don't hold your breath for higher home prices yet—there is a caveat. Industry experts believe banks still have a ton of distressed properties on their books that haven't gone through the foreclosure process yet, primarily due to hold-ups in the legal process.

The geyser of foreclosures seen over the past couple of years to have slowed to a relatively manageable flow, but a flood of new properties could still keep prices in certain areas lower for longer.

mhandley@usnews.com

Twitter: @mmhandley

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