Third Quarter Metro Area Home Prices Hold During Post-Credit Sales Decline
Washington, DC, November 11, 2010
Fully half of metropolitan areas tracked in the third quarter continued to show modest home price increases from a year ago, despite a sharp decline in home sales after the deadline for the home buyer tax credit, according to the latest survey by the National Association of REALTORS®.
In the third quarter, 77 out of 155 metropolitan statistical areas1 (MSAs) had higher median existing single-family home prices in comparison with the third quarter of 2009, including 11 with double-digit increases; two were unchanged and 76 metros showed price declines. In the third quarter of 2009 only 30 MSAs experienced annual price gains.
The national median existing single-family price was little changed at $177,900 in the third quarter, down 0.2 percent from $178,200 in the third quarter of 2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at discount, accounted for 34 percent of third quarter sales, up from 30 percent a year ago.
Lawrence Yun, NAR chief economist, said relatively flat home prices have been the hallmark of the 2010 housing market. “Even with swings in home sales, prices this year have been changing very little from year-ago readings. Areas with some larger swings in home price reflect the degree of distressed sales in those markets,” he said.
“Home sales through the first three quarters of this year are virtually the same as year-to-date sales at this time last year, and therefore broadly support home values. However, there are large local market differences with prices rising in job-creating regions like the Washington, D.C. area, the Dakotas and Texas; and also in markets recovering from over-correction such as California coastal cities,” Yun said.
As expected, total state existing-home sales, including single-family and condo, fell 25.3 percent to a seasonally adjusted annual rate2 of 4.16 million in the third quarter from a surge of 5.57 million in the second quarter driven by the home buyer tax credit; they were 21.2 percent below the 5.28 million-unit pace in the third quarter of 2009. Year-to-date, there were 3.79 million existing-home sales, essentially unchanged from 3.77 million at this point in 2009.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the outstanding factor in the current market is housing affordability. “The great news for home buyers in today’s market is historically low mortgage interest rates and affordable home prices in much of the country, along with a great selection of properties,” he said.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.45 percent in the third quarter, down from 4.91 percent in the second quarter; it was 5.16 percent in the third quarter of 2009.
“Given the relationship between mortgage interest rates, home prices and median family income, the buying power in today’s market is matching the highest levels we’ve seen dating all the way back to 1970. Although credit is still tight, a REALTOR® can guide you toward responsible, sustainable home ownership in today’s market by helping you find both the right home and a mortgage that meets your needs,” Phipps said.
Yun added that there are additional indicators for home price stabilization. “A recent surge in commodity prices, along with the fact that the cost of constructing a new home exceeds the value of existing homes in many markets, bode well for continuing home price stabilization,” he said.
In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $171,400 in the third quarter, down 3.9 percent from the third quarter of 2009. Twenty-nine metros showed increases in the median condo price from a year ago and 27 areas had declines; only four metros saw annual price gains in third quarter of 2009.
Regionally, the median existing single-family home price in the Northeast rose 2.5 percent to $253,400 in the third quarter from a year earlier. Existing-home sales in the Northeast fell 27.3 percent in the third quarter to a pace of 693,000 and are 24.4 percent below the third quarter of 2009. Year-to-date sales in the Northeast totaled 638,000, essentially unchanged from 637,000 at this time last year.
In the Midwest, the median existing single-family home price declined 3.0 percent to $145,600 in the third quarter from the third quarter of 2009. Existing-home sales in the Midwest dropped 33.7 percent in the third quarter to a level of 860,000 and are 28.9 percent below a year ago. Year-to-date there were 849,000 sales in the Midwest, compared with 860,000 in 2009.
In the South, the median existing single-family home price slipped 1.9 percent to $157,000 in the third quarter from the same period in 2009. Existing-home sales in the region fell 21.8 percent in the third quarter to an annual rate of 1.64 million and are 16.4 percent below the third quarter of last year. There were 1.43 million sales year-to-date in the South, in contrast with 1.39 million last year.
The median existing single-family home price in the West dipped 0.4 percent to $224,800 in the third quarter from a year ago. Existing-home sales in the West fell 20.7 percent in the third quarter to a pace of 973,000 and are 18.2 percent below the third quarter of 2009. Year-to-date sales in the West totaled 876,000, vs. 889,000 in 2009.