Home prices tumbled to a two-year low in the first quarter, with declines in almost half of U.S. cities, the National Association of Realtors said.
The median price for existing houses and condominiums slid 1.8 percent from a year ago to $212,300 in the first three months of this year, the lowest since the first quarter of 2005, when it was $199,700, the Chicago real estate trade group said. The median price for a single-family home fell in 62 of 145 metropolitan areas.
In the Philadelphia metropolitan area, home prices rose 1.3 percent from the 2006 first quarter to $222,500, the group said.
Tumbling prices sparked an increase in sales as bargain shoppers snapped up the cheaper properties. Seasonally adjusted, home sales rose 2.4 percent to an annualized rate of 6.41 million from 6.26 million in the fourth quarter of last year, the association said yesterday. Compared with a year earlier, the number of sales fell 6.6 percent.
"The market is clearing itself as the lower prices lead to less supply," said Michael Darda, chief economist at MKM Partners L.L.C., of Greenwich, Conn. "Over time, that will help to bring supply and demand into equilibrium."
The first quarter's sales probably will be the highest of the year, the association said. Purchases of previously owned homes likely will fall 3.5 percent in the second quarter to an annualized pace of 6.19 million, increasing to 6.34 million by the end of 2007, the group said in a May 8 forecast.
Median prices probably will slide in the second and third quarters and be flat in the final three months of the year, the association said. Prices will begin to rise in 2008, though by less than a percentage point per quarter, the group forecast.
Declining prices, coupled with reports yesterday showing foreclosures were continuing to rise and confidence among home builders was slumping, demonstrate that the yearlong housing slump is not abating.
The city with the biggest drop in median home price in the first quarter was Elmira, N.Y., with a 15 percent decline to $75,300, making it the cheapest housing market in the nation, according to the association.
The median price for a single-family house in the metropolitan area surrounding New York City grew 1 percent to $463,700. That area includes New York suburbs north of the city as well as northern New Jersey and parts of Long Island.