House Prices Fall Nationwide

Prices for used houses fell in one-third of the country's metropolitan areas in the 12 months ending in June, according to the National Association of Realtors. Home values fell so steeply in Michigan, Ohio and Florida that they dragged down the median price for the whole country. New Orleans is getting socked, too.

From April through June this year, half the houses that were resold in the United States cost $223,800 or more. The median price during the same period in 2006 was $227,100. The $3,300 difference represents a 1.5 percent decline.

The Realtors divide the country into four regions.

The median price in the Northeast rose 0.7 percent in the 12 months ending in June. Prices fell in Midwest, South and West regions. The biggest drop was in the Midwest, where the median price declined 2.2 percent in 12 months. The median price of a house in the Midwest topped out at $175,000 in the third quarter of 2005; since then, it has fallen 6.6 percent, to $163,500.

An Improvement?

The National Association of Realtors spun the numbers as an improvement. Senior economist Lawrence Yun pointed out that prices increased in more metro areas in the second quarter than in the first quarter. He called it an encouraging trend, in much the same way a football coach might express satisfaction over being behind by 7 points at halftime after trailing by 10 points earlier in the game.

"Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets," Yun says.

He adds that there has been a downward skew in house prices because fewer houses are being sold in expensive areas and more houses are being sold in cheaper areas.

The Realtors, mindful that a loss of consumer confidence would spell a steep decline in home sales and prices, try to put a brave face on every set of statistics. Bloggers and other critics enjoy pouncing on the utterances of the association's economists. That was the case this time.

"While the NAR is right to focus on the metro-level home price data rather than the national median, the picture is not quite as promising as they make it out to be," says Andrew Jakabovics, the Center for American Progress's associate director of economic mobility. He says that when you factor in overall inflation, only 53 metro areas saw gains in home prices, and not the 97 that the Realtors boast of.

The biggest year-over-year drop in price was in Elmira, N.Y., where half of the houses that were resold in the second quarter cost $71,700 or more, compared to a median price of $87,300 during the same period in 2006 -- a 17.9 percent decline. Elmira was the only city in New York to post a price drop of more than 0.7 percent.

Three other metro areas saw double-digit price declines in one year: Palm Bay-Melbourne-Titusville, Fla. (down 15 percent); Davenport-Moline-Rock Island, Iowa and Ill. (down 11.3 percent), and Sarasota-Bradenton-Venice, Fla. (down 11.3 percent).

Those are small metro areas. Large cities exert the biggest influence on median prices for entire regions and the nation as a whole. A bunch of big cities with falling prices can be found in a Nike Swoosh-shaped swash around Lake Erie.


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