Home Prices Edge Up in Second Quarter

By:
Kara Johnson | August 11, 2010

National home prices edged up in the second quarter of 2010, posting a 1.5 percent increase over the same period one year before, according to new survey data from the National Association of Realtors (NAR). 

Nearly two-thirds of metropolitan areas surveyed (100 out of 155) showed higher median values for single-family homes compared to the second quarter of 2009, with 14 showing double-digit gains, the survey reported. The national median price for single-family homes was $176,900, up from $174,200 one year before.
 
Prices were driven by a surge in home sales attributed to the homebuyer tax credit, and to a decline in percentage of distressed home sales. Distressed properties represented 32 percent of all home sales in the second quarter of 2010, down from 36 percent one year earlier.
 
Lawrence Yun, NAR chief economist, said the decline in home prices appears to have ended last year, but did not yet see signs of a rebound.
 
“All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market we don’t expect any consequential movement in home prices for the foreseeable future.”
 
The strongest improvement was in the Akron, Ohio metropolitan area, which posted a 36 percent gain in home prices from one year before. Several California communities that were hard-hit by the downturn in the housing market also posted strong price gains over the past year, including gains of 26 percent in the San Jose area, 25 percent in San Francisco/Oakland, 17.8 percent in Riverside/San Bernadino and 9.3 percent in the Los Angeles area.
 
Other notable gains in hard-hit areas were a 10.3 percent annual increase in housing prices in the Phoenix, Ariz. region; and 13.4 percent around Lansing, Mich.
 
Florida home values presented a mixed bag, with price changes ranging from gains of 12.7 percent in the Melbourne/Titusville “Space Coast” and up 12.0 percent around Fort Myers, but with declines of 13.0 percent in Ocala, 9.0 percent in Jacksonville and 8.0 percent in Daytona Beach. The Miami region, which was particularly hard-hit in the downturn, posted a modest gain of 3.3 percent.
 
Yun cautioned that data on median prices may not reflect actual trends in home value appreciation or depreciation, owing to the large percentage of distressed homes in the mix. He said the current rise is at least partly due to an increase in “normal” non-distressed sales.
 
Vicki Cox, NAR president, said home sales will likely continue to lag behind population growth over the next few months, although credit restrictions that have shut out many potential buyers should gradually ease as bank balance statements improve.

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