US metropolitan home prices hold in 3Q2010

WASHINGTON: Half of the metropolitan areas tracked in the third quarter (3Q) of 2010 continued to show modest home price increases from a year ago, despite a sharp decline in home sales after the deadline for the home buyer tax credit, according to the latest survey by the US National Association of Realtors (NAR).

In the third quarter, 77 out of 155 metropolitan areas had higher median existing single-family home prices compared with a year ago, including 11 with double-digit increases; two unchanged and 76 declines. In the third quarter of 2009 only 30 areas experienced annual price gains.

The national median existing single-family price was little changed at US$177,900 (RM551,223.15) in the third quarter, down 0.2% from US$178,200 in 3Q2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at discount, accounted for 34% of 3Q sales, up from 30% a year ago.

Lawrence Yun, NAR chief economist in a press release on Thursday, Nov 11 said home prices have been relatively flat this year. "Prices this year have been changing very little from year-ago readings. Areas with some larger swings in home price reflect the degree of distressed sales in those markets," he said.

"Home sales through the first three quarters of this year are virtually the same as year-to-date sales this time last year, and therefore broadly support home values. However, there are large local market differences with prices rising in job-creating regions like the Washington DC area, the Dakotas and Texas; and also in markets recovering from over-correction such as California coastal cities," Yun said.

As expected, total state existing-home sales, including single-family and condo, fell 25.3% to a seasonally adjusted annual rate of 4.16 million in the third quarter from a surge of 5.57 million in the second quarter driven by the home buyer tax credit; they were 21.2 % below the 5.28 million-unit pace in the third quarter of 2009. Year-to-date, there were 3.79 million existing-home sales, essentially unchanged from 3.77 million at this point in 2009.

However, NAR president Ron Phipps, broker-president of Phipps Realty in Warwick, Rhode Island, said the current market offers greater housing affordability. "The great news for home buyers in today's market is historically low mortgage interest rates and affordable home prices in much of the country, along with a great selection of properties," he said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.45% in the third quarter, down from 4.91% in the second quarter; it was 5.16% in the third quarter of 2009.

"The buying power in today's market is matching the highest levels we've seen dating all the way back to 1970," Phipps said.

Yun added that there are indicators for home price stabilization. "A recent surge in commodity prices, along with the fact that the cost of constructing a new home exceeds the value of existing homes in many markets, bode well for continuing home price stabilisation," he said.

Metro area condominium and cooperative prices — covering changes in 56 metro areas — showed the national median existing-condo price was US$171,400 in the third quarter, down 3.9% from the third quarter of 2009. Twenty-nine metros showed increases in the median condo price from a year ago and 27 areas had declines; only four metros saw annual price gains.

Regionally, the median existing single-family home price in the Northeast rose 2.5% to US$253,400 in the third quarter from a year earlier. Existing-home sales in the Northeast fell 27.3% in the third quarter to a pace of 693,000 and are 24.4% below the third quarter of 2009. Year-to-date sales in the Northeast totaled 638,000, essentially unchanged from 637,000 at this time last year.

In the Midwest, the median existing single-family home price declined 3.0% to US$145,600 in the third quarter from the third quarter of 2009. Existing-home sales in the Midwest dropped 33.7% in the third quarter to a level of 860,000 and are 28.9% below a year ago. Year-to-date there were 849,000 sales in the Midwest, compared with 860,000 in 2009.

In the South, the median existing single-family home price slipped 1.9% to US$157,000 in the third quarter from the same period in 2009. Existing-home sales in the region fell 21.8% in the third quarter to an annual rate of 1.64 million and are 16.4% below the third quarter of last year. There were 1.43 million sales year-to-date in the South, in contrast with 1.39 million last year.

The median existing single-family home price in the West dipped 0.4% to US$224,800 in the third quarter from a year ago. Existing-home sales in the West fell 20.7% in the third quarter to a pace of 973,000 and are 18.2% below the third quarter of 2009. Year-to-date sales in the West totaled 876,000 versus 889,000 in 2009.