NAR: Home Prices Decline in Four of Five Metros

Four out of five metropolitan areas recorded lower home prices in the third quarter from a year earlier, according to the ""National Association of Realtors'"":http://www.realtor.org (NAR) quarterly survey released today. In addition, NAR said, existing-home sales fell from the second quarter in 32 states.
Based on NAR's market data, in the third quarter, 120 out of 152 metropolitan statistical areas (MSAs) showed decreases in median existing single-family home prices compared to the same quarter in 2007; four were unchanged and 28 metros actually saw an increase in their median home price.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said price comparisons in many areas are like apples and oranges. ""A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago,"" McMillan said. ""It’s very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition.""
Distressed sales - foreclosures and short sales - accounted for 35 to 40 percent of transactions in the third quarter, pulling down the national median existing single-family price to $200,500, or 9.0 percent lower than the third quarter of 2007, NAR said. A year ago, when there were significantly fewer distressed transactions, the NAR recorded the national median price as $220,300. (The median price is where half of the homes sold for more and half sold for less.)
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 5.04 million units in the third quarter, up 2.6 percent from 4.91 million units in the second quarter, but remain 7.7 percent below the 5.46 million-unit pace in the third quarter of 2007.
Lawrence Yun, NAR chief economist, said conditions continue to range widely. ""A pattern of sharply higher sales in areas with large price declines is well established,"" Yun said. ""Affordability conditions have consistently been a major factor in driving sales. Historically during recessions, buyers have responded to incentives and it’s important for government to keep that in the forefront of stimulus decisions.""
According to ""Freddie Mac"":http://www.freddiemac.com, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.32 percent in the third quarter from 6.09 percent in the second quarter; the rate was 6.55 percent in the third quarter of 2007. ""Last week"":http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputWk.jspxweek=46&ending=20081113, Freddie Mac reported the 30-year fixed fell to 6.14 percent.
NAR reported the largest sales gain during the third quarter to be in the state of Arizona, up 28.3 percent from the second quarter, followed by California which rose 28.1 percent and Nevada, up 26.2 percent.
The steepest declines in single-family home prices in the third quarter were in three California markets: the Riverside-San Bernardino-Ontario area, where the median price of $227,200 dropped 39.4 percent from a year ago, followed by Sacramento-Arden-Arcade-Roseville at $212,000, down 36.8 percent from the third quarter of 2007, and San Diego-Carlsbad-San Marcos, where the price dropped 36.0 percent to $377,300. ""These areas have seen some of the strongest sales gains with some reports of multiple bidding,"" Yun said.
The largest single-family home price increase in the third quarter was in the Elmira, New York area, where the median price of $105,000 rose 12.5 percent from a year ago. Next was Decatur, Illinois at $93,400, up 8.7 percent from the third quarter of 2007, followed by the Bloomington-Normal, Illinois area, where the third-quarter median price increased 8.1 percent to $168,400.
The typical seller purchased their home six years ago and is experiencing net equity gains, NAR said in its report. The national increase in value since the third quarter of 2002 is 18.3 percent, which is a median gain of $31,000. Even with the current downward price distortion, 90 percent of metro areas are showing six-year price gains, NAR said.
For NAR's full report, ""click here"":http://www.realtor.org/press_room/news_releases/2008/home_prices_rise_in_some_metro_areasxLID=RONav0021. To view data tables for both metro area home prices and state existing-home sales, ""click here"":http://www.realtor.org/research/research/metroprice.