With Prices Down, Home Sales Rise

Home prices have dropped in 115 out of a surveyed 150 metropolitan areas across the country, leading to an increase in existing home sales in these areas, according to a realtors group.

A drop in prices around the country for existing homes has led to an increase in sales in 13 states, according to a report by the National Association of Realtors. Nearly three-quarters of metropolitan areas showed lower home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country.

In the second quarter, 35 out of 150 metropolitan statistical areas showed gains in median existing single-family home prices from the second quarter of last year, while 115 had price declines.

Because foreclosures and short sales are accounting for about one-third of transactions, there is a downward pull to the national median price. In the second quarter, the median existing single-family home price was $206,500, down 7.6 percent from the second quarter of 2007 when it was $223,500.

Total state existing home sales, including single-family and condo, were at a seasonally adjusted annual rate of 4.91 million units in the second quarter, down 0.8 percent from 4.95 million units in the first quarter, and were 16.3 percent below a 5.87 million-unit pace in the second quarter of 2007.

Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market.

“The biggest home sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun said.

Compared with the first quarter, existing-home sales increased 25.8 percent in California, 25 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida. The largest sales gain during the second quarter was in Idaho, up 51.7 percent; Virginia sales rose 10.5 percent.

The steepest declines in single-family home prices in the second quarter were in the Sacramento-Arden-Arcade-Roseville area of California, where the median price of $229,500 dropped 35.6 percent from a year ago, followed by Cape Coral-Fort Myers, Fla., at $178,100, down 33.1 percent from the second quarter of 2007, and Riverside-San Bernardino-Ontario, Calif., where it dropped 32.7 percent to $265,200.

Median second-quarter metro area single-family home prices ranged from a very affordable $71,700 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly 11 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $755,000. The second most expensive area was San Francisco-Oakland-Fremont, at $684,900, followed by Honolulu at $636,000.

Regionally, the median existing single-family home price in the Northeast fell 9.6 percent to $269,000 in the second quarter from the same period in 2007. The median existing single-family home price in the Midwest declined 0.9 percent to $161,500 in the second quarter from the same period in 2007. In the South, the median existing single-family home price was $177,000 in the second quarter, down 4.1 percent from a year earlier. In the West, the median existing single-family home price was $290,600 in the second quarter, which is 17.4 percent below a year ago.

Source: National Association of Realtors