CHICAGO – Home prices rose 1.5 percent in 100 U.S. metropolitan areas in the second quarter as a buyer tax credit boosted demand and distressed properties made up a smaller portion of sales, according to a report released Wednesday by the National Association of Realtors.
The median price of a single-family home sold in the Providence-New Bedford-Fall River metro area climbed 4.2 peercent from a year earlier to $224,700. During the same time period, home prices increased 7.2 percent in the Boston-Cambridge-Quincy metro area to $360,200, 6.7 percent in the Worcester metro area to $235,000, and 3.6 percent in the Norwich-New London, Conn., metro area to $224,000.
A federal tax credit of as much as $8,000 underpinned second-quarter real estate demand, boosting sales to an annual pace of 5.61 million homes, according to the Realtors group. The effect is waning, said Richard DeKaser, chief economist at Woodley Park Research in Washington. Transactions probably will fall to a 4.55 million pace in the three months ending in September, the NAR said in a forecast posted on its website.
“Throwing a sale price on housing stimulated demand, but there is no doubt it’s been a largely temporary effect,” DeKaser said in a telephone interview. “The level of housing activity, whether one is talking about sales or construction activity, is abysmally low.”
Distressed homes, which typically sell at a discount, accounted for 32 percent of sales in the second quarter, down from 36 percent a year earlier, according to Chicago-based NAR. The category includes foreclosed homes, those where the owners have fallen behind on payments and so-called short sales, in which a lender agrees to sell a property for less than the value of its mortgage.
The median price of a single-family home sold in Akron, Ohio, climbed 36 percent from a year earlier to $119,700, the biggest rise of 155 metros measured. Prices in San Jose, Calif., gained 26 percent to $630,000 and San Francisco added 25 percent to $591,200.
The worst-performing markets included Cumberland, Md., with a price decline of 15 percent; and Tucson, Ariz., down 14 percent. Prices in Lansing, Mich.; Ocala, Fla.; Beaumont, Texas; and Boise City, Idaho, all fell 13 percent.
In a separate report today, NAR said U.S. sales rose 9.1 percent from the first quarter’s 5.14 million annual pace. North Dakota led the nation, with transactions climbing 52 percent. Sales increased 39 percent in Hawaii and 37 percent in Washington, D.C.
The average U.S. rate for a 30-year fixed mortgage tumbled to 4.49 percent this month, the lowest on record, after reaching a 2010 high of 5.21 percent in the week ended April 8, according to Freddie Mac, the McLean, Va.-based mortgage buyer. The decline shaved about $130 off a monthly payment on a $300,000 home loan.
The federal homebuyer tax credit required people to sign contracts by the end of April. Those buyers had until June 30 to close their sales. Congress extended the deadline through September.
Providence Business News staff contributed to this report.
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