Conditions for home buyers improved during the third quarter as existing single-family home prices in many metropolitan areas experienced corrections, and most states saw sales activity below a year ago which helped to build housing inventories, according to the latest quarterly surveys by the National Association of REALTORS.
Nationally, prices for existing homes declined in August compared with the same time in 2005. Although prices dropped less than 2%, it was the first decline in 11 years. In October, the prices of 46% of the homes for sale in the Boston area had been reduced; in April, the figure was 36%. In Phoenix, 41% of homes were marked down in October, compared with 30% in April.
Moody's Economy.com is forecasting price declines, measured from the peak of each market to its projected trough, in 100 metro areas. Some 20 markets, mainly in Florida, California and Nevada, could see double-digit-percentage declines. Moody's expects average prices to fall 19% in Cape Coral, Fla., 17% in Reno, Nev., and 16% in Stockton, Cal.
This trend may not mean a collapse of sellers' resolve to hold the line on prices, however. After refinancing many times, taking out equity, many people don't have wiggle room to reduce their asking prices. The same could apply for sellers who bought close to the market peak and can't afford to accept less than they owe.
There are some markets where home values remain stable as price increases have been less dramatic, so the risk of being caught in a significant correction is less likely.
Throughout the country the inventory of new and existing residences for sale is increasing. Nationwide there are nearly four million properties listed for sale, that's a record and double the number at the start of this decade. At current sales levels, it could take six months to sell all the new homes on the market and seven to move all the existing ones.
Third-quarter metro area single-family home prices, examining changes in 148 metropolitan statistical areas, show 102 areas had price gains, including 21 metros with double-digit annual increases, and 45 areas experiencing price declines; one was unchanged.
Even with the overall decline, 10 states showed increases in sales activity from a year ago. North Carolina registered the largest increase (9.7%) and South Carolina registered the smallest (0.7%) Click to download and view report. -- [Acrobat Reader Required]
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