28/11/06 - Third Quarter Prices down in US market

In the US, the national median existing single-family home price was $224,900 in the third quarter, down 1.2 percent from a year earlier when the median price was $227,600, report the National Association of Realtors (NAR). The median is a typical market price where half of the homes sold for more and half sold for less.

Among 148 metropolitan statistical areas included in the survey, 102 areas had price gains, including 21 metros with double-digit annual increases, and 45 areas experienced price declines; one was unchanged.

Sales volumes were generally down across the nation. Total state existing-home sales, including single-family homes and condos, were at a seasonally adjusted annual rate of 6.27 million units in the third quarter, down 12.7 percent from a 7.18 million-unit pace in the third quarter of 2005. Even with the overall decline, however, 10 states showed increases in sales activity from a year ago. And, as www.mortgagenewsdaily.com points out, the third quarter of 2005 enjoyed the second highest levels of sales on record, making comparison potentially misleading.

"Good news for buyers"

The NAR is putting a positive spin on the gloomy situation by emphasising how declining prices and increasing inventory is "good news for buyers". David Lereah, NAR’s chief economist, says "Last year we had a record sales market and historically tight supplies of homes with buyers bidding over the asking price. With the market in full transition, buyers now have choices and sellers are more willing to negotiate. Under these circumstances it’s no surprise that overall home prices are slightly below a year ago.”

Lereah says the trend will likely continue into the months ahead, although there’s expected to be modest price appreciation in most of the country in 2007.

NAR’s new president, Pat Vredevoogd Combs says, “With the supply of homes at the highest level in over a decade and historically low mortgage interest rates, it’s become a great time to buy a home. This window of opportunity will continue into the new year, but inventories are starting to decline and sellers will be less willing to negotiate when conditions begin to balance in most areas around early spring.”

Biggest sales and price increases

The biggest total sales increase was in North Carolina, where existing-home sales rose 9.7 percent from the third quarter of 2005. In Texas, the third-quarter resale pace rose 8.6 percent from a year earlier, while Montana experienced the third strongest gain, up 6.4 percent.

The largest single-family home price increase was in the Salem, Oregon, area, where the third quarter price of $228,000 was 24.7 percent higher than a year ago. Next was Elmira, N.Y., at $93,600, up 21.4 percent from the third quarter of 2005. The Salt Lake City area, with a third quarter median price of $216,300, increased 19.2 percent in the last year.

Median third-quarter metro area single-family prices ranged from a very affordable $86,000 in both Decatur, Illinois, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly nine times that amount in the San Francisco-Oakland-Fremont area where the median price was $749,400.

Condo prices down slightly

In the condo sector, metro area condominium and cooperative prices show the national median existing condo price was $222,900 in the third quarter, down 2.1 percent from the same period in 2005. Thirty-one metros showed annual increases in the median condo price, including eight areas with double-digit gains; 27 metros had price declines.

The strongest condo price gains were in the Knoxville, Tennessee, area, where the third quarter price of $155,700 rose 29.0 percent from a year ago. In Wichita, Kansas, the median condo price of $130,300 rose 25.5 percent from the third quarter of 2005, while Albuquerque, N.M., at $153,300, increased 21.0 percent.

Regional variations

THE SOUTH
o Regionally, total existing-home sales in the South were at an annual rate of 2.52 million units in the third quarter, down 7.8 percent from a year ago. After the gains in North Carolina and Texas, the next strongest increase in the South was in Louisiana, up 4.5 percent from the third quarter of 2005, while resales in Arkansas rose 4.3 percent; four other Southern states also posted sales gains.
o The median existing single-family home price in the South was $187,300 in the third quarter, which is 0.1 percent below a year earlier. The strongest increase in the South was in the Virginia Beach-Norfolk-Newport News area, where the median price of $243,800 was 16.9 percent above the third quarter of 2005. Next was Gainesville, Fla., at $215,200, up 15.9 percent from a year ago, followed by the Gulfport-Biloxi area of Mississippi, with a 15.7 percent gain to $154,400

MIDWEST
o In the Midwest, total existing-home sales declined 11.8 percent to a 1.42 million-unit annual level compared with the third quarter of 2005. The strongest performance in the region was in South Dakota, where sales rose 3.1 percent from a year ago.
o The median existing single-family home price in the Midwest was $170,500 in the third quarter, down 2.6 percent from a year earlier. The strongest metro price increase in the region was in the Wichita, Kan., area, where the median price of $127,900 was 15.0 percent higher than the third quarter of 2005. Next was Bismarck, N.D., at $140,400, up 7.4 percent, and Kankakee-Bradley, Ill., at $138,400, up 6.1 percent in the last year.

NORTH EAST
o The Northeast saw an existing-home sales pace of 1.05 million units in the third quarter, which was 12.5 percent below a year ago.
o The median Northeastern resale single-family home price was $276,000 in the third quarter, which is 4.8 percent below the same period in 2005. After Elmira, N.Y., the strongest price increase in the Northeast was in Atlantic City, N.J., with a median price of $277,200, up 12.0 percent from the third quarter of last year, followed by Binghamton, N.Y., with a median price of $107,400, up 10.0 percent.

WEST
o In the West, the existing-home sales pace of 1.29 million units was 21.5 percent lower than the third quarter of 2005. The best performance the region was in Montana where existing-home sales rose 6.4 percent from a year earlier.
o The median existing single-family home price in the West slipped 0.9 percent to $349,000 during the third quarter. After Salem, Ore., and Salt Lake City, the strongest increase in the West was in the Seattle-Tacoma-Bellevue area of Washington, at $372,400, up 14.6 percent from third quarter of 2005, followed by Spokane, Wash., at $191,100, up 14.1 percent, and Farmington, N.M., at $176,200, up 12.9 percent from a year ago.