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Housing Market Still Under Pressure

The NAR says the median home price for a single-family home fell again in the first quarter.
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Home prices continued to fall in the first quarter, according to the National Association of Realtors.

On a national basis, the median price for a single-family home fell 1.8% to $212,300, continuing a decline that started last year. In the fourth quarter, the median home price was down 2.7% on the year.

Once again, many of the hardest-hit areas were in Florida, where a glut of new condominiums has been weighing on prices, and in Rust Belt cities that have been hurt by falling employment.

There are signs that the market could be bottoming out. The median home price rose in more than half of all metro areas, or 82, during the first quarter. It was flat in one area and declined in 62 areas. That was a reversal from the fourth quarter, when home prices fell in more than half of metro areas.

The median is a typical market price where half of the homes sold for more and half sold for less.

The NAR says at least part of the decline in the median price is because sales have shifted away from the more expensive homes.

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"It appears the worst of the price correction is behind us," says NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt.

The trade group is still calling for home prices to fall this year for the first time since 1991; it expects the median price for an existing home in 2007 to drop 1% to $219,800 and the median price for a new home to fall new home to fall $100 to $246,400.

However, economist Lawrence Yun says the latest figures indicate home prices are close to bottoming out and could start to recover in the second half of the year. "Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter. Conditions changed fairly rapidly during the boom, but we need more patience now to see a slow, gradual recovery."

In the first quarter, the biggest decline was in Elmira, N.Y., where the median single-family home price fell 14.9% to $75,000, followed by the Seattle-Tacoma-Bellevue area of Washington, down 12.3% at $380,200, and the Sarasota-Bradenton-Venice area of Florida at $337,000, down 12%.

The biggest increase was in the Cumberland area of Maryland and West Virginia, where the median sales price of a single-family home was $100,000, up 17.1% on the year. Next was Beaumont-Port Arthur, Texas, at $115,800, up 16.5%, followed by the Gulfport-Biloxi area of Mississippi, where the first-quarter median price increased 15.7% to $153,700.

Condo prices also are falling. On a nationwide basis, the median condo price was up 1% on the year at $224,500. More than half of the areas measured recorded declining or unchanged prices, however.