NEW YORK – Home prices in the U.S. suffered their largest annual decline on record in the first three months of this year as banks dumped foreclosed homes onto the market in states hit hard by the recession, the National Association of Realtors (NAR) reported today.
The median sale price of an existing single-family home was $169,000 in the first quarter, down 13.8 percent from the median price in the same period a year ago, the group announced. First-time home buyers, buoyed by lower sales and an $8,000 federal tax credit passed by Congress in February, accounted for half of all sales, the NAR said.
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Bloomberg News said it was the largest decline in home prices since the NAR began keeping records in 1979.
“Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market – they’re critical for a housing recovery,” Lawrence Yun, chief economist at the NAR, said in a statement.
“Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas,” he said.
Prices fell in 134 of the 152 metropolitan areas surveyed, with the largest declines reported in Cape Coral-Ft. Myers, Fla. (down 59 percent from a year ago); Akron, Ohio (down 48 percent); San Francisco (down 43 percent); and San Jose, Calif. (down 42 percent).
In the Providence metropolitan region, which also includes Fall River and New Bedford, the median price fell 23 percent from a year earlier to $202,400. As recently as 2007, the median price stood at $286,500.
The total number of transactions increased in 17 states compared with the previous quarter “as speculators and first-time buyers purchased bank-owned properties,” Bloomberg reported. Prices for those homes were 20 percent below those of others on average, the survey found.
“We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other,” Yun said.
Total sales of existing single-family homes, condominiums and co-ops in the first quarter declined by 6.8 percent from the previous year and 3.2 percent from the previous quarter, to a seasonally-adjusted rate of 4.59 million units, the NAR said. Sales increased compared with the previous quarter in 17 states, and were higher compared with a year ago in six states.
In Rhode Island, the number of home sales in the first quarter rose by a seasonally-adjusted rate of 3.3 percent to 12,400, compared with the previous quarter, but were down 3.1 percent compared with a year earlier. In Massachusetts, quarterly sales fell 12.8 percent from the previous quarter and 9.3 percent from a year ago.
The total number of existing homes on the market fell slightly in March to 3.7 million, from 3.8 million in February, the NAR said.
U.S. banks held $26.6 billion worth of foreclosed real estate at the end of last year, more than double the amount a year earlier, according to FDIC figures, Bloomberg said.
Mortgage rates are down sharply from a year ago. The average rate for a 30-year fixed mortgage in the U.S. was 4.84 percent last week, compared with 6.05 percent a year earlier, according to Freddie Mac.
Last month, the rate hit a record low of 4.78 percent, Bloomberg said.
The NAR is forecasting that 30-year mortgage rates will average 5 percent this year and 5.3 percent next year, compared with 6.1 percent in 2008, Bloomberg said. The Realtors predict 4.97 million existing homes will be sold this year, up from 4.91 million last year.
