The Wall Street Journal
By: Alan Zibel
November 12, 2010
Home prices fell in nearly half of U.S. metropolitan areas in the third quarter, indicating that the market is losing steam without government tax credits, according to an industry report.
The median price for home resales fell compared with last year in 76 out of 155 areas tracked by the National Association of Realtors, the trade group said Thursday. Prices rose in 77 areas and were unchanged in two.
In the second quarter of the year, prices rose in nearly two-thirds of U.S. cities.
The national median price for single-family homes, however, was nearly unchanged. It was $177,900 in the July-September quarter, down 0.2% from a year earlier.
The metro areas showing the biggest declines from a year earlier were Ocala, Fla. (20%), Melbourne, Fla. (15%), and Tucson, Ariz. (15%).
Showing gains were Burlington, Vt. (18%), Elmira, N.Y. (17%), and Dallas (14%).
The government sparked a surge in home sales at the start of the year by providing tax credits of up to $8,000, mainly for first-time owners. But since they expired, sales have slumped despite the lowest mortgage rates in decades.
Home sales in the third quarter were down 25% from the second quarter, and down 21% from a year earlier, the Realtors group said.
The weak economy has kept buyers on the sidelines. Plus, uncertainty over the extent to which banks filed fraudulent foreclosure documents has caused some buyers to shy away from foreclosed properties.
Several lenders have stopped seizing properties over the past six weeks to fix document flaws.Once banks resolve those problems, analysts expect foreclosures to climb again. "Foreclosure sales are going to increase into next year, which will cause prices to decline further," said Celia Chen, a senior director with Moody's Analytics.
Partly as a result, the number of homes lost to foreclosure in October fell 9% from a month earlier to about 93,000, according to foreclosure-listing service RealtyTrac Inc.
Nationwide, "distressed property," including foreclosures and homes at risk of foreclosure, accounted for 34% of third-quarter transactions, up from 30% a year earlier, the Realtors estimated.
"Prices this year have been changing very little from year-ago readings," said Lawrence Yun, the Realtors' chief economist. "Areas with some larger swings in home price reflect the degree of distressed sales in those markets."