In July there were 39,507 total sales, 17,699 (44.8%) of which were foreclosure resales, leaving only 21,808 organic sales. This is a multi-decade low for July. There were 28,795 homes totaling $12.55 billion that went back to banks and 40,219 new Notices-Of-Default. July NOD’s alone will bring about 32,250 additional homes that will go back to the banks as shadow inventory 4-5 months from now.

The median price dropped once again to $318k and stands 34.3% below its 2007 all-time price peak. In the past 4 months, 169,500k Notices-Of-Default were filed, meaning 135,600k homes will go back to thebank as shadow inventory in the next 6 months. Finally, only 10,712 homes left the inventory pool based on how many homes came back to the banks vs. total sales. None of these figures includemost FSBO or home builder inventory. To cap it off, massive supply from banks may be on the way.

If sales do grow into the Winter, which would be historic and the number of foreclosure sales continues to grow as a percentage of total sales, where does this leave Joe and Jane Homeowner and the builders? If sales do not grow and foreclosure sales continue to grow as a percentage of total sales, we remain on track for an absolute housing downside overshoot and subsequent total meltdown.