NAR Sees Broad Stabilization in Metro Area Home Prices in Q2

Homes prices across the country gained ground in the second quarter, with more metropolitan areas showing increases from a year ago, according to the ""National Association of Realtors"":http://www.realtor.org (NAR).
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""New data released"":http://www.realtor.org/research/research/metroprice by the trade group Wednesday shows that during the April to June timeframe, 100 out of 155 metropolitan statistical areas (MSAs) included in the NAR survey had higher median existing-home prices compared to the second quarter of 2009, including 14 with double-digit increases.

NAR say it's evidence that the trend of firming home prices is solidifying. By comparison, in the first quarter of this year 91 areas had higher prices, while only 26 MSAs experienced annual price gains in the second quarter of 2009.

The national median existing single-family price was $176,900 in the second quarter, up 1.5 percent from $174,200 a year ago, according to NAR.

The improvement is likely partly attributable to fewer distressed property sales. NAR says distressed homes accounted for 32 percent of second quarter sales, down from 36 percent this time last year.

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Even though home prices in the second quarter of 2010 received a nice little boost from a surge in home sales driven by the homebuyer tax credit, and it’s widely expected that both sales and prices will turn downward in the aftermath, Lawrence Yun, NAR’s chief economist, says the inherent correction in home prices following the boom appears to have ended in 2009.

“All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” Yun said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes also will help to support home values.”

Yun, though, urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he said. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”

NAR reports that total existing-home sales, including single-family and condo, rose 9.1 percent to a seasonally adjusted annual rate of 5.61 million in Q2, up from 5.14 million in the first quarter. Second quarter sales figures were 17.3 percent above the 4.78 million-unit pace during the same period in 2009.

According to NAR’s market data, sales increased from the first quarter in 44 states and the District of Columbia, while 47 states and D.C. had increases over year-ago sales levels.