Home prices rose in 91 U.S. cities in the first quarter as states hard hit by foreclosures began to recover and a tax credit cut the number of properties for sale.
The median price of a single-family home sold in Saginaw, Michigan, doubled to $60,800, the Chicago-based National Association of Realtors said in a report today. Prices in Akron, Ohio, climbed 90 percent to $95,300 and Grand Rapids, Michigan, recorded a 26 percent increase to $90,700. Nationally, the median declined 0.7 percent.
Cities that led the nation in foreclosures a year earlier had the biggest price increases as a tax credit of as much as $8,000 boosted demand and drove the supply of unsold homes to a four-year low in January, according to Lawrence Yun, chief economist for the Realtors’ group. Brian Bethune, chief U.S. financial economist for IHS Global Insight, said an improving job market should sustain the fledgling rebound in real estate.
“In the second half of the year, employment growth and an improving economic situation should keep the housing recovery on track,” Bethune said in a telephone interview from his Lexington, Massachusetts, office.
Today’s report showed the recovery accelerating from the fourth quarter when 67 metropolitan areas reported price gains.
Peak to Trough
The U.S. median home price tumbled 29 percent over three and a half years as defaults among subprime borrowers flooded the housing market with cheaply priced foreclosures and Wall Street piled up $1.78 trillion in losses and asset writedowns.
The median price of an existing U.S. home peaked at $230,300 in July of 2006 and hit a low of $164,600 in February, according to NAR data. The drop was 13 percent in 2009, outpacing 2008’s 9.5 percent decline.
This year, prices may increase 2.5 percent as the economy improves, according to the Realtors’ forecast.
The median price of a single-family home in the New York metropolitan area rose 1.8 percent to $380,400 in the three months ended March 31. The areas surrounding New Haven and Milford, Connecticut, gained 5.3 percent to $227,900.
The Edison, New Jersey, region had a 1.5 percent gain in the median price to $325,800; and Hartford, Connecticut, posted a 1.6 percent increase to $225,900. Prices in the Boston metropolitan area increased 11 percent to $321,800.
“The market has changed dramatically from last year, with things now selling fairly quickly at close to asking price,” said Mary Kelleher, a real estate broker with Gibson Sotheby’s International Realty in Boston. “Last year was like having root canal surgery.”
Worst Markets
The worst-performing markets were Ocala and Orlando, Florida, each with price declines of 15 percent. Reno, Nevada, fell 14 percent and Las Vegas was down 12 percent.
In a separate report, NAR said U.S. sales fell 14 percent in the first quarter from the prior period, mostly because buyers rushed to purchase homes in the fourth quarter when the tax credit for purchases was originally set to expire.
Congress ultimately extended and expanded the credit for purchase contracts signed by April 30.
South Dakota led the nationwide sales decline with transactions falling 33 percent in the first quarter. Sales in Pennsylvania and Idaho dropped 28 percent. Connecticut transactions decreased almost 15 percent and New York sales were down 9.4 percent, NAR said.
Nationally, home sales probably will rise 4.3 percent to 5.38 million this year and gain 5.1 percent to 5.66 million in 2011, according to a forecast posted on NAR’s website. In 2009, sales climbed for the first time in four years to 5.16 million.
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