Home prices fell in almost half of U.S. cities in the fourth quarter as the number of foreclosures rose to a record, hurting the confidence of buyers.
The median price of a single-family home dropped from a year earlier in 71 of 152 metropolitan areas tracked by the National Association of Realtors, the group said in a report today. Prices in Cumberland, Maryland, tumbled 20 percent, the biggest decline, followed by a 14 percent drop in Kankakee, Illinois. The median price nationwide rose 0.2 percent to $170,600, as cities including New York and Boston posted gains.
Mounting foreclosures are depressing home values and discouraging buyers who don’t want to make a deal if they believe prices have further to fall. The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from a year earlier, the biggest 12-month decrease since December 2009, data released last month showed.
“The flow of homes into foreclosure remains extremely high,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The housing market is in very poor shape.”
Big cities where employment is growing saw gains, according to the Realtors group. The median price of a single-family home in the New York metropolitan area climbed 4 percent. The Washington region had an 8.1 percent increase and prices in the Boston metropolitan area rose 4.2 percent, the report said.
‘Depressed’ Property Market
Federal Reserve policy makers described the U.S. real estate market as “depressed” in a Jan. 26 statement following the end of a two-day meeting in Washington. The central bankers said declining home values continued to stymie the consumer spending that accounts for about three-quarters of the world’s largest economy.
The number of homes in foreclosure in December rose to a record 2.2 million, according to Lender Processing Services Inc., based in Jacksonville, Florida. Including foreclosures and late payments, there were 6.87 million non-current mortgages, the company said.
Home sales gained 15.4 percent in the fourth quarter from the previous three months, at a seasonally adjusted pace, led by a doubling in Idaho, the Chicago-based Realtors association said in a separate report today. Sales jumped 55 percent in Vermont and 34 percent in Minnesota.
The state with the worst sales record was Virginia, with a 5.4 percent drop, according to the report. Sales in the nation’s capital were unchanged from the prior quarter.
December Sales Gain
Unadjusted, there were 404,000 home sales in December, the first gain after three consecutive declines, according to Realtors association data. That level matched the unadjusted sales average for all of 2010. In 2009, sales averaged 413,000 a month.
This year, existing home sales probably will gain 7.9 percent to 5.3 million from a 13-year low of 4.91 million in 2010, the Realtors’ group said in a forecast posted on its website.
The median U.S. home price may rise 0.5 percent in 2011, following a 0.3 percent gain last year, the trade association said in the forecast. In February 2010, the median home price reached an almost eight-year low after tumbling 29 percent from a 2006 record, according to Realtors data.
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