November 18, 2008

U.S. home prices declined in third quarter

Home prices declined in 80 percent of 152 U.S. metropolitan regions in the third quarter, the National Association of Realtors said Tuesday.

In 28 of the cities tracked, median home prices for existing single-family homes increased over the third quarter of 2007, NAR said. Prices in four cities remained unchanged, while 120 cities showed price declines.

A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago, NAR President Charles McMillan said.

Distressed sales, resulting from either foreclosures or short sales, made up 35 percent to 40 percent off all home sale transactions in the third quarter, pulling down the national median existing single-family price to $200,500, NAR said in a statement.

The median price is 9 percent lower than the third quarter of 2007, when there were significantly fewer distressed transactions, NAR said.

Sales increased to an annual rate of 5.04 million units in the third quarter, up 2.6 percent from the second quarter's annual sales rate of 4.91 million units.

A pattern of sharply higher sales in areas with larger price declines is well established, NAR Chief Economist Lawrence Yun said.