Home Prices Decline in Majority
Of Cities Across the U.S.

Home prices declined from a year earlier in about half of all metropolitan areas in the fourth quarter, the National Association of Realtors reported.

It was the first time the trade group has recorded declining or unchanged prices in the majority of cities covered since it began collecting the data in 1979, a Realtors spokesman said.

On a national basis, the median home price during the quarter was $219,300, down 2.7% from a year earlier. Prices began falling in many areas last year after a boom that pushed prices up at double-digit annual rates in much of the country in the first half of this decade.

In the latest quarter, the median price declined in 73 metro areas, increased in 71 and was flat in five. The biggest decrease was in the Sarasota-Bradenton-Venice area of Florida, down 18% from a year before. Many of the biggest decliners were in Florida, where a glut of new condominiums is weighing on the market, and in Rust Belt cities like Youngstown and Toledo, Ohio, hurt by shrinking industrial employment.

The biggest increase was in Atlantic City, N.J., up 26%. Paul Striefsky, a broker at Vanguard Property Group, which operates in the Atlantic City area, said a new wave of upscale casino-related development has brought in more buyers of both second homes and primary residences.

Older homes in Atlantic City are being replaced by much more expensive ones, skewing the price data, added Jeffrey Otteau, president of Otteau Valuation Group Inc., an appraisal firm in East Brunswick, N.J. Many in the housing industry hope prices will level off or start edging up by this year's second half. Employment remains fairly strong and mortgage rates low. "Hopefully, the fourth quarter was the bottom of this current business cycle," said David Lereah, the Realtors' chief economist.

But a glut of new homes continues to weigh on prices in many areas, and lenders are becoming more stringent in their credit standards amid a rise in late payments and defaults. Those defaults are expected to increase the supply of foreclosed homes dumped on the market. The tougher credit standards will prevent some potential buyers from obtaining loans.

Meanwhile, the National Association of Home Builders said its index for sales of new single-family homes, a measure of confidence among builders, rose to 40 in February from 35 in January. The latest reading was the highest since June.

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