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NAR – Home prices are on the rise

May 12, 2010 by Great American Realty · Leave a Comment 

Washington, May 11, 2010

A growing number of metropolitan areas are experiencing price gains from a year ago, while most states have seen healthy gains in home sales from the first quarter of 2009, according to the latest survey by the National Association of Realtors®.

In the first quarter, 91 out of 152 metropolitan statistical areas1 showed higher median existing single-family home prices in comparison with the first quarter of 2009, including 29 with double-digit increases; three were unchanged and 58 metros had price declines. In the fourth quarter 67 areas reported gains and 123 were down, while only 30 MSAs in third quarter of 2009 showed annual price increases.

The national median existing single-family price was fairly flat at $166,100, down 0.7 percent from the first quarter 2009 price of $167,300. The median is where half sold for more and half sold for less. Distressed homes, which typically are discounted by 15 percent relative to traditional homes, accounted for 36 percent of first quarter sales.

Lawrence Yun, NAR chief economist, said stabilizing home prices are encouraging. “This flattening in home prices is something we’ve been seeing in all of the home price measures lately, and quite clearly in this metro area price report,” he said. “The tax credit has been very effective in drawing down excess inventory, with about one million additional sales resulting directly from the stimulus.”

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 5.14 million in the first quarter, down 14.0 percent from a surge of 5.97 million in the fourth quarter, which was driven by the initial tax credit. However, first quarter sales remain 11.4 percent above the 4.61 million-unit level in the first quarter of 2009. “Year-ago comparisons are more meaningful in this report due to sales swings from the tax credit,” Yun said.

Sales increased from a year ago in 44 states and the District of Columbia; 31 states and D.C. saw double-digit gains while two were unchanged and four were down.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said there’s been a change in market psychology. “Buyer confidence is back, and home buyers have long-term views. The typical buyer plans to stay in their home for 10 years, so we’ve put the flipping mentality behind us and most people see housing for what it is – shelter that provides social benefits and is also a good long-term investment,” Golder said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 5.00 percent in the first quarter, up slightly from a record low 4.92 percent in the fourth quarter; it was 5.06 percent in the first quarter of 2009.

Golder said even with some recent easing of mortgage credit, separate surveys3 show the housing market continues to be constrained by mortgage issues. “One-third of NAR members report the most important factor limiting potential clients has been difficulty in obtaining a mortgage,” she said.

“In addition, 11 percent of Realtors® in the first quarter report a contract was cancelled because an appraisal came in less than the price negotiated between a buyer and seller, and another 16 percent report a contract had to be renegotiated because of a low appraisal,” Golder said. “As a result, the housing recovery isn’t as strong as it could be. We are discussing these and other concerns with government and industry leaders at a real estate summit currently under way here in Washington.” The three-day summit began today at the Realtors® Midyear Legislative Meetings & Trade Expo.

In the condo sector, metro area condominium and cooperative prices – covering changes in 55 metro areas – showed the national median existing-condo price was essentially unchanged at $170,700 in the first quarter, down 0.1 percent from the first quarter of 2009. Twenty-four metros showed increases in the median condo price from a year earlier and 31 areas had declines; in the fourth quarter 11 metros were up, and only four metros experienced annual price gains in third quarter of 2009.

Yun said there were solid single-family price gains in a variety of metro areas. “We see double-digit price increases in the San Francisco Bay region, and in smaller metros in the Northeast,” he said. “Price gains in some Midwestern markets are not very meaningful because of comparisons to very high levels of distressed homes that were sold at huge discounts a year ago.”

Regionally, the median existing single-family home price in the Northeast rose 9.0 percent to $256,300 in the first quarter from the same quarter in 2009. Existing-home sales in the Northeast fell 17.7 percent in the first quarter to a level of 850,000 but are 19.7 percent higher than a year ago.

In the Midwest, the median existing single-family home price slipped 0.8 percent to $130,600 in the first quarter from a year ago. Existing-home sales in the Midwest dropped 17.3 percent in the first quarter to a pace of 1.13 million but are 10.8 percent above the first quarter of 2009.

In the South, the median existing single-family home price was $148,200 in the first quarter, up 1.1 percent from the first quarter of 2009. Existing-home sales in the South fell 14.6 percent in the first quarter to an annual rate of 1.89 million but are 10.7 percent higher than a year ago.

The median existing single-family home price in the West was $210,200 in the first quarter, which is 8.3 percent below a year ago. Existing-home sales in the West declined 6.8 percent in the first quarter to an annual rate of 1.27 million but are 8.3 percent higher than the first quarter of 2009.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE: Data tables for both metro area home prices and state existing-home sales are posted at:

www.realtor.org/research/research/metroprice. For areas not covered in the tables, please contact the local association of Realtors®.

There often are differences between NAR’s data and locally reported data because of differences in methodology, which may include the geographic coverage area, housing types, and Census benchmarking used in NAR’s model. More importantly, there is a parallel between the percentage changes over time that is typically seen even when using different methodologies.

1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. A list of counties included in MSA definitions is available at:www.census.gov/population/estimates/metro-city/0312msa.txt

Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high-cost metro areas, the national median condo price generally is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

2The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. NAR began tracking the state sales series in 1981.

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

Each May when first quarter data is published, NAR Research incorporated a review of seasonal activity factors and fine-tunes historic data for the previous three years based on the most recent findings. Revisions have been made to quarterly seasonally adjusted annual rates for 2007 through 2009; there are no revisions to quarterly median price data beyond the normal revisions to the prior quarter.

3Data on mortgage problems from the 2010 NAR Member Profile, published May 6, and data on appraisal problems from the Realtors® Confidence Index, posted April 26.

Second quarter metro area home price and state resale data will be released August 11, 2010 at 10 a.m. EDT.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.

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