Home Prices Show Small Annual Decline

By:: Kara Johnson | December 20, 2010

U.S. home sales fell 5 percent in November, exceeding the normal seasonal decline heading into winter, although modest price declines raised hopes among realtors hope that the market is stabilizing.

Home prices were down only 1.7 percent compared to November 2009, despite a nearly 26 percent annual decline in sales over the same period, according to the latest RE/MAX National Housing Report. In addition, home prices actually showed annual increases in two-thirds of the 54 metropolitan areas surveyed.

“While home sales usually decline in the winter months, we are seeing a larger than normal correction this winter due to several artificial factors like the expired tax credit,” said Margaret Kelly, RE/MAX CEO. “Despite predictions about falling home prices, they appear to be remaining stable with several markets reporting significant price increases over last year.”

The median sales price was $195,351, down from $198,863 in November 2009. Prices peaked for the year in July, topping out at just over $210,000.

The biggest price increases were reported along the East Coast, where all five of the fastest-rising markets were located. Burlington, VT posted the biggest annual price increase, 17.4 percent; followed by Trenton, NJ, up 15.9 percent; Raleigh, NC, up 13.3 percent; Washington, DC, up 9.4 percent; and Boston, MA, up 8.8 percent.

Seventeen metro areas showed annual price declines, with San Francisco, CA the only one to remain unchanged from November 2009.

The slowing sales pace has driven up both the inventory supply and the average days on market it takes for properties to sell. The housing inventory currently stands at 10-month supply in November, after rising since last April, when it was as low as 5.5 months. A six-month supply is considered to represent an equilibrium between buyers and sellers.

The average days on market has also been edging up and stood at 93 in November, up from 91 in October and 82 in July. The figure ranged as high as 100 in February 2009, in the wake of the collapse of the subprime mortgage market.

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