The housing market showed signs of stabilizing in the second quarter of this year, even as the recovery of the broader economy stalled, according to the latest survey of home prices by the National Association of Realtors, or NAR.
More about housing prices
This survey marks the first time in four years that the survey has shown a nationwide, year-over-year gain, says NAR spokesman Walter Maloney. The last time national home values rose was in the second quarter of 2006.
Overall, the median U.S. home price rose to $176,900 in the second quarter of 2010, a 1.5 percent increase over the same quarter last year, driven in part by gains in the West and Midwest and stabilization in the markets hardest hit by the housing downturn. The second quarter also marked the last days of the homebuyers' tax credit, which may have played a part in the rise.
Homes in the western states showed the biggest improvement overall, rising 2.6 percent year over year to $219,700. The median home price in the Midwest registered a 1.4 percent year-over-year gain, rising to $148,500.
Of all the metro markets surveyed, formerly distressed markets in California were among the biggest gainers. Home prices in San Jose-Sunnyvale-Santa Clara, Calif., rose an average 26 percent, followed by San Francisco-Oakland-Fremont, Calif., with a 25 percent jump. In addition, home prices in Riverside-San Bernardino-Ontario, Calif., the part of the "Inland Empire" that was particularly hard-hit by the crisis, showed a gain of 17.8 percent.
Top 10 rising markets
|Akron, Ohio||36 percent|
|San Jose-Sunnyvale-Santa Clara, Calif.||26 percent|
|San Francisco-Oakland-Fremont, Calif.||25 percent|
|Riverside-San Bernardino-Ontario, Calif.||17.8 percent|
|Elmira, N.Y.||16.7 percent|
|Lansing-E. Lansing, Mich.||13.4 percent|
|San Diego-Carlsbad-San Marcos, Calif.||13.1 percent|
|Palm Bay-Melbourne-Titusville, Fla.||12.7 percent|
|Erie, Pa.||12.3 percent|
|Cape Coral-Fort Myers, Fla.||12 percent|
The Midwest also had its fair share of gains. Akron, Ohio, which had seen double-digit losses during the worst of the housing downturn, registered the biggest year-over-year gain in average home price for any metro area in the second quarter: 26 percent. Lansing-E. Lansing, Mich. also posted a big jump, rising 13.4 percent year over year, according to the survey's results.
Overall, the deep losses and wild oscillations of the past few years seem to have leveled off, says Lawrence Yun, NAR's chief economist.
"All year we've been seeing relatively flat national home prices, which appear to be supported by market fundamentals," says Yun.
However, some markets, particularly in the Southwest and Florida, are still apparently working through the massive glut of unsold and vacant homes created by the punctured housing bubble. To be sure, the situation was likely exacerbated by high levels of unemployment in those areas.
Top 10 sinking markets
|Cumberland, Md.-W.Va.||-15.4 percent|
|Tucson, Ariz.||-13.7 percent|
|Ocala, Fla.||-13 percent|
|Beaumont-Port Arthur, Texas||-12.9 percent|
|Boise City-Nampa, Idaho||-12.7 percent|
|Hagerstown-Martinsburg, Md.-W.Va.||-9.2 percent|
|Jacksonville, Fla.||-9 percent|
|Deltona-Daytona Beach-Ormond Beach, Fla.||-8 percent|
|Salem, Ore.||-7.5 percent|
|Gulfport-Biloxi, Miss.||-7.4 percent|
The median home price in Tucson, Ariz., registered among the biggest losses in the survey, falling 13.7 percent to $150,200 in the second quarter. Reno, Nev., also saw falling prices; the average there fell 6.1 percent, according to NAR.
Parts of Florida continued to show weakness in the NAR survey. Home prices in Ocala were down 13 percent; Jacksonville, 9 percent; Deltona-Daytona Beach-Ormand Beach, 8 percent; and Orlando, 6 percent.
But bright spots were evident even in these hard-hit regions. Las Vegas and Miami-Fort Lauderdale-Miami Beach, two areas that had epitomized the "riches-to-rags" desperation of the deflating housing bubble, both posted year-over-year home-price gains of 0.4 percent and 3.3 percent, respectively.
Yun attributes the improving numbers in part to many markets finally working through a backlog of distressed housing inventory, which was dragging down home prices.
"The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation," Yun says. "The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now, as more normal, nondistressed home sales are occurring, the median price in many areas is showing higher values."
Indeed, distressed homes accounted for 32 percent of second-quarter sales, down from 36 percent in the year-ago period, according to the survey.
Progress going forward may depend on the expiration of the homebuyers' tax credit and on broader economic fundamentals such as unemployment, which is still stubbornly high at 9.5 percent nationwide.