Lawrence Yun, NAR chief economist, said disruptions in the mortgage market have played a role. "The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," he said. "For buyers who need loans of more than $417,000, mortgage interest rates have been running more than a percentage point higher, and that has been having an obvious impact. Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets."
NAR's track of metro area single-family home prices is the largest published series of metropolitan home prices, with data available back to 1979. The metro home price series treats all homes equally, without placing higher weights on more expensive homes as in other home price series. The disruption in higher priced sales continues to drag down the aggregate national median existing single-family home price, which was $206,200 in the fourth quarter, down 5.8 percent from the fourth quarter of 2006 when the median price was $219,000. The national median normally is a typical market price, where half of the homes sold for more and half sold for less.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said he is encouraged with plans to increase conventional loan limits. "Higher limits for FHA loans, which go into effect March 14, will be a big help to first-time buyers in high-cost markets. Higher limits for conventional loans purchased by Freddie Mac and Fannie Mae will take a bit longer - when they become available, high-income, creditworthy borrowers in high-cost areas will have access to affordable and safer financing, and that will help unleash pent-up demand," he said.
"With the market in a state of flux, it's especially important for consumers to stay abreast of widely varying and changing market conditions. We encourage them to have a traditional long-term view, which means taking the time to thoughtfully research the market. More than ever, the best resource is a Realtor(R) who can put local conditions in perspective, provide advice and negotiate the transaction."
Despite the annual decline in the fourth quarter median home price, the typical seller who purchased their home six years ago still saw a very healthy gain. The median increase in value for sellers who purchased that home in the fourth quarter of 2001 is 31.2 percent, and the median home equity accumulation is $49,000.
In the fourth quarter, the largest single-family home price increase was the Cumberland area of Maryland and West Virginia, where the median price of $116,600 rose 19.0 percent from a year ago. Next was Yakima, Wash., at $170,600, up 18.0 percent from the fourth quarter of 2006, followed by the Binghamton, N.Y., area, where the fourth quarter median price increased 14.8 percent to $110,000.
"The healthiest housing markets today generally are moderately priced and are experiencing job growth and often population growth, which in turn is supporting strong price growth," Yun said. "Most of the weakest markets have either experienced both job and population losses, or they are experiencing corrections following a prolonged period of rapid price growth."
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate(2) of 4.96 million units in the fourth quarter, down 8.5 percent from 5.42 million in the third quarter, and are 20.9 percent below a 6.26 million-unit pace in the fourth quarter of 2006. "With prior reports of national home sales declines, it is not surprising to see 14 states with declines in excess of 20 percent from a year ago," Yun noted.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to 6.23 percent in the fourth quarter from 6.55 percent in the third quarter; the rate was 6.25 percent in the fourth quarter of 2006. In recent weeks, Freddie Mac has been reporting the 30-year fixed rate to be under 5.7 percent.
