Hoping for a housing recovery soon? You might have to wait awhile longer. Even as the broader economy began adding jobs and posting improved growth numbers, house prices continued to stagnate in the fourth quarter of 2010.
The median price of U.S. homes sold in the final three months of 2010 was just 0.2 percent higher than in the fourth quarter of 2009, according to the National Association of Realtors’ quarterly survey. Nationally, half of American homes sold for more than $170,600 last quarter, compared to a median price of $170,300 at the end of 2009.
Still, there were some bright spots in the National Association of Realtors, or NAR, report, which surveys sales prices in 152 metropolitan areas nationwide. Home prices in three of four U.S. regions showed gains, led by the Northeast, which rose 2.3 percent year-over-year to a median price of $240,400. Several markets in that region led U.S. markets in price growth, with home-price gains in the double digits in Elmira, N.Y., up 16.47 percent; Pittsfield, Mass., up 15.83 percent; and Binghamton, N.Y., up 15.61 percent.
|Elmira, N.Y.||16.47 percent|
|Pittsfield, Mass.||15.83 percent|
|Binghamton, N.Y.||15.61 percent|
|Burlington-South Burlington, Vt.||14.37 percent|
|Buffalo-Niagara Falls, N.Y.||14.27 percent|
|Erie, Penn.||12.90 percent|
|Peoria, Ill.||12.69 percent|
|Milwaukee-Waukesha-West Allis, Wis.||11.52 percent|
The Midwest and the South each showed smaller gains of 0.5 percent (to $139,200) and 0.3 percent (to $152,400), respectively. The only region to show an overall decline, the West, shed 2.9 percent to $214,400, a far cry from the double-digit declines of 2009 and 2010.
|Cumberland, Md.-W.Va.||-20.27 percent|
|Kankakee-Bradley, Ill.||-14.39 percent|
|Ocala, Fla.||-13.95 percent|
|Toledo, Ohio||-13.87 percent|
|Youngstown-Warren-Boardman, Ohio-Pa.||-13.62 percent|
|South Bend-Mishawaka, Ind.||-13.12 percent|
|Atlanta-Sandy Springs-Marietta, Ga.||-12.50 percent|
|Tucson, Ariz.||-12.24 percent|
|Salem, Ore.||-10.75 percent|
|Mobile, Ala.||-10.68 percent|
Overall, the home value picture in the U.S. was mixed, with prices rising in 78 of 152 metropolitan areas and falling or staying level in the other 74. The biggest roadblock to a nationwide housing recovery is still distressed properties, which accounted for 34 percent of all home sales in the fourth quarter of 2010, according to the NAR report.
NAR chief economist Lawrence Yun sees working through the vast inventory of distressed homes as a necessary step toward a healthy U.S. real estate market in the future.
“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,” Yun says. “A recovery to normalcy requires steady trimming of the inventories.”
While the NAR survey shows the number of homes sold in the final quarter of 2010 was 15.4 percent lower than in the final quarter of 2009, much of that decline can be attributed to an artificial flood of sales in the latter months of 2009 as buyers rushed to meet the initial deadline for the homebuyer tax credit.
Yun says a broader and more sustained recovery in housing prices may hinge on continued improvement in the U.S. job market.
“The healthier local housing markets are also experiencing favorable local employment conditions,” Yun says.
But employment isn’t the only factor that may dictate the pace of a housing recovery. NAR President Ron Phipps says the availability of consumer credit will also have a big influence on the condition of U.S. real estate markets going forward.
“Mortgage interest rates recently hit record lows, median family income has edged up and prices in most areas have been stable following the correction from the housing boom. For people with good credit and long-term plans, it’s hard to imagine a better opportunity than what we see today,” Phipps says. “Unfortunately the flow of credit is unnecessarily tight and is constraining the pace of the housing and job growth recoveries.”