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|Posted Saturday, February 17, 2007|
|Home Prices Fall in Most Major Markets|
By VIKAS BAJAJ
Prices for single-family homes fell in more than half of the nations 149 biggest metropolitan areas in the last three months of 2006, according to data released yesterday by a trade group for real estate agents.
The figures from the National Association of Realtors show that the housing market weakened noticeably in many parts of the country at the end of last year and indicate that suggestions by some industry officials that the market has hit bottom could be premature. In the previous quarter, prices fell in one-third of all metropolitan areas.
The biggest price declines were concentrated primarily in two kinds of cities: the formerly booming markets along the coasts and in the Southwest, and in Midwest and Northeast cities hurting from the loss of manufacturing jobs. The biggest declines, for instance, were in Florida Sarasota-Bradenton (down 18 percent), Palm Bay-Melbourne (17 percent) and Cape Coral-Fort Myers (11.7 percent). The declines in prices were especially steep for condominiums.
You have two kinds of weakness here: there is the traditional economic-driven weakness in parts of the Midwest, and there is the bubble-bursting weakness, said Jan Hatzius, chief United States economist at Goldman Sachs. Thats what is bringing down the national home price appreciation rate.
Among the 10 cities with the biggest declines was New Orleans, which has struggled with a slow pace of reconstruction since Hurricane Katrina hit the area in August 2005. Median prices half the homes sold for more and half for less fell 9.3 percent there, to $162,100. Mr. Hatzius said the decline in New Orleans might also reflect a correction, because prices there shot up in the months after the hurricane.
Nationally, the median price of single-family homes fell 2.7 percent, to $219,300.
Atlantic City and Salt Lake City topped the list of metropolitan regions where prices increased in the fourth quarter. Broadly speaking, prices were strongest in the Northwest and in some parts of the South.
At the same time, the number of homes sold fell in 40 states and in the District of Columbia. Nevada and Florida each reported declines of more than 30 percent; in Arizona, Virginia and the District of Columbia, sales fell by more than 20 percent. Nationwide, sales fell 10.1 percent in the fourth quarter from the same period in 2005, to an annual pace of 6.24 million.
Sales increased in six states Alaska, Mississippi, Kentucky, Texas, Arkansas and Illinois and were flat in Utah. The Realtors did not have enough data on sales in Idaho, New Hampshire and Vermont.
In addition to weaker sales and declining prices, the number of homes on the market has been climbing. That suggests, economists say, that prices may have to fall further for sales to pick up and the overall housing market to recover. In the fourth quarter, the vacancy rate for owner-occupied homes was 2.7 percent, up from 2 percent a year before and the highest it has been since the Census Bureau started compiling the data in 1956.
That means we have got a while before this thing fully adjusts, said Edward Leamer, an economist at the University of California, Los Angeles. Mr. Leamer noted that individual sellers often preferred to wait rather than cut the price to a level that would be agreeable to most buyers. That gap between seller and buyer is reflected in the decline in sales and the buildup in the number of homes sitting vacant.
Still, the Realtors group said it expected home sales and prices to rise in the spring. Home sales are leveling at historically high levels, and examination of data within the quarter shows home prices stabilizing toward the end, David Lereah, the groups chief economist, said in a statement.
Unlike some other sources of data, the Realtors group does not adjust home prices to reflect changes in the kinds of homes being sold. So if this years sales include a larger number of cheaper homes, compared with a year ago, it will appear that home prices are falling even if the actual price of any given home has not declined.
Some indexes, including one compiled by the Office of Federal Housing Enterprise Oversight, the federal agency that oversees Fannie Mae and Freddie Mac, do take into account the kinds of homes sold. The government index shows that prices were still rising through the third quarter of 2006, albeit at a far slower pace than in 2005.
Copyright 2007 The New York Times Company. Reprinted from The New York Times, Business Day, of Friday, February 16, 2007.
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