Home Price Stabilization Seen in Most Metro Areas

Home sales rebounded in 49 states during the fourth quarter. Over half of the available metropolitan areas experienced price gains from a year ago, while most of the rest saw prices weaken, according to the National Association of REALTORS®.

Total state existing-home sales, including single-family and condo, jumped 15.4% to a seasonally adjusted annual rate of 4.80 million in the fourth quarter from 4.16 million in the third quarter. The sales were 19.5% below a surge to an unsustainable cyclical peak of 5.97 million in the fourth quarter of 2009, which was driven by the initial deadline for the first-time buyer tax credit.

In the fourth quarter, the median existing single-family home price rose in 78 out of 152 metropolitan statistical areas (MSAs) from the fourth quarter of 2009. These rises included 10 with double-digit increases. Three MSAs were unchanged and 71 areas had price declines. In the fourth quarter of 2009, a total of 67 MSAs experienced annual price gains.

The national median existing single-family home price was $170,600 in the fourth quarter, up 0.2% from $170,300 in the fourth quarter of 2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at a discount of 10 to 15%, accounted for 34% of fourth quarter sales, little changed from 32% a year earlier.

Lawrence Yun, NAR chief economist, is encouraged by the trend. "Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they've been selling well and housing supplies have trended down," he said. "A recovery to normalcy requires steady trimming of the inventories."

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.41% in the fourth quarter, down from 4.45% in the third quarter; it was 4.92% in the third quarter of 2009.

Job growth is a major factor in price appreciation in metro areas such as the Washington, D.C., region, where the median existing single-family home price of $331,100 in the fourth quarter is 8.1% higher than a year ago; the Boston-Cambridge-Quincy area, at $346,300, up 4.2%; and Austin-Round Rock, Texas, at $190,300, up 4.1%.

Regionally, the median existing single-family home price in the Northeast increased 2.3% to $240,400 in the fourth quarter from a year earlier. Existing-home sales in the Northeast rose 15.0% in the fourth quarter to a level of 797,000 but are 22.8 percent below the surge in the fourth quarter of 2009.

In the Midwest, the median existing single-family home price rose 0.5% to $139,200 in the fourth quarter from the same period in 2009. Existing-home sales in the Midwest jumped 18.3% in the fourth quarter to a pace of 1.02 million but are 25.4 percent below the cyclical peak one year ago.

In the South, the median existing single-family home price edged up 0.3% to $152,400 in the fourth quarter from the fourth quarter of 2009. Existing-home sales in the region rose 11.4% in the fourth quarter to an annual rate of 1.82 million but remain 17.8% below the surge in the fourth quarter of last year.

The median existing single-family home price in the West declined 2.9% to $214,400 in the fourth quarter from a year ago. Existing-home sales in the West jumped 19.9% in the fourth quarter to a level of 1.17 million but are 14.2% below the cyclical peak in the fourth quarter of 2009.

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