Foreclosures and short sales took a toll on home prices in the fourth quarter as the median price of existing single family homes plunged 12.4% from a year earlier, according to a report released today from the National Association of Realtors in Washington.
The latest figures indicate the median price of an existing single family home was $180,100 in the fourth quarter — its lowest level since the second quarter of 2003.
The 12.4% decline was the biggest year-over-year drop since the group started tracking the metro numbers in 1979.
Distressed sales, which include foreclosures and short sales, accounted for 45% of transactions in the fourth quarter, up from 38% in the third quarter, the report said. A short sale occurs when a homeowner sells a house for less than the amount of money on the mortgage.
“Foreclosures are heavily skewing the broader home price figures to be much lower,” association president Charles McMillan, a broker with Coldwell Banker Residential Brokerage — Dallas-Fort Worth in Irving, Texas, said in a statement. He cautioned that big discounts are not occurring in neighborhoods with few foreclosures.
However, he said buyers are clearly taking advantage of distressed sellers. “People are responding to discounted prices and are slowly absorbing the excess inventory,” Mr. McMillan said. “Buyers clearly see value in today’s pricing.”
The report shows 134 out of 153 metropolitan markets posted price decreases in the fourth quarter from the year-earlier period. Markets reporting the steepest declines in single-family home prices — with prices falling at least 30% — were Las Vegas-Paradise, seven metro areas in California, Phoenix-Mesa-Scottsdale, and three metro areas of Florida, the report said.
The markets reporting the biggest price gains were the Beaumont-Port Arthur area of Texas, Bloomington-Normal, Ill., and Dover, Del., where median prices rose 16.7%, 9.6% and 6.5%, respectively.
The report showed sales of all existing homes, which include single-family homes and condominiums, fell to a seasonally adjusted rate of 4.7 million units in the fourth quarter, down 6.4% from the third quarter and down 5.9% from the comparable period a year earlier.
Lawrence Yun, chief economist at the NAR, said the housing market is feeling squeezed by job losses and consumer concerns about the economy. This was partly offset by low mortgage rates, as the rate on the average 30-year fixed-rate mortgage fell to 5.86% in the fourth quarter from 6.32% in the third quarter and 6.23% in the year-earlier period, according to
Freddie Mac of McLean, Va.
However, Mr. Yun remains hopeful that the government’s stimulus package could lure homebuyers into the market and “we could see a quick lift in home sales for the critical spring homebuying season.”
