Filed under: Forecasts, Bad news, Housing, Recession

Median home prices fell in two-thirds of American cities in Q1 2008, the National Association of Realtors announced Tuesday.

The median price fell 7.7% to $196,300 in Q1 2008 down from $212,600 for the same period a year ago, the NAR said. It was the largest year-over-year decline since the NAR started keeping comprehensive records of median home prices in 1979.

Median prices declined 12.3% in the West, 7.9% in the Midwest, 7.5% in the South, and 3.32% in the Northeast.

Median prices fell in 100 of 149 U.S. metropolitan areas, rose in 48, and 1 market was unchanged. The largest declines occurred in California: Sacramento, down 29%; Riverside and San Bernardino, each down 28%, and San Diego, 23%. On the positive side was Binghamton, N.Y., which registered the largest increase, up 11.8%, followed by Peoria, Illinois, up 10.4%.

‘Housing market looks stalled’

Economist Peter Dawson did not mince words regarding the U.S. housing sector’s condition, circa spring 2008. “The median price declines are large and show a housing market with an enormous inventory build, a housing market that looks stalled,” Dawson said. “With inventories this high, prices are likely to continue to decline for at least another 3-4 quarters, unless we see a sudden recovery by the U.S. economy, which isn’t likely. It remains a buyers market in most American cities, to say the least.”

Further, the above price decline occurred despite a drop in fixed mortgage rates. The NAR said the national average rate for a 30-year, conventional, fixed-rate mortgage fell to 5.88% in Q1 2008 from 6.23% in Q4 2007; the rate was 6.22% in Q1 2007, the NAR said. However, Dawson was quick to point out that although mortgage rates are lower, year-over-year, lenders’ mortgage requirements are “much more rigorous, for most potential borrowers” compared to a year ago, which “has almost certainly reduced the total number of mortgages approved” — a factor in the current low home sales rate and large inventories.

The NAR said there were about 4.1 million U.S. homes for sale at the end of Q1 2008, about a 9.5- to 10-month supply at current sales rates. A typical/normal market has about a 3-4 month supply of homes for sale.

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This entry was posted on Wednesday, May 14th, 2008 at 8:17 am and is filed under Real Estate and Housing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.