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Existing U.S. single-family homes prices in metro areas fell 9.0 percent in the third quarter compared with the same period last year, weighed down by foreclosure sales, a trade group report showed on Tuesday.
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AP Home For Sale - Reduced Priced |
Home values fell in 120 of 152 metropolitan areas, were unchanged in four and rose in 28, according to the National Association of Realtors.
"A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago," said NAR President Charles McMillan.
"It's very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition."
The trade association said 35-40 percent of home transactions in the third quarter were distress sales that either took place through foreclosure or short-sales where the holder of the mortgage agrees to take a loss.
The rout in the U.S. housing market has spread to other sectors of the economy and has sparked a global credit crunch that is tipping major economies, including the United States, into a recession.
Analysts argue that stability in the housing sector is key to any recovery in the U.S. economy, which preliminary government estimates showed contracted 0.3 percent in the third quarter.
Forecasts on Monday from the National Association for Business Economists suggested that home prices could fall further, with new home inventories running at 10 months' supply.
According to the NAR, existing-home sales, including single-family and condo, rose at a seasonally adjusted annual rate of 2.6 percent in the third quarter compared to the second quarter. However, sales were 7.7 percent lower compared to the same period last year.
"A pattern of sharply higher sales in areas with large price declines is well established," said Lawrence Yun, chief economist at the NAR.
"Affordability conditions have consistently been a major factor in driving sales. Historically during recessions, buyers have responded to incentives and it's important for government to keep that in the forefront of stimulus decisions."
The median existing single-family home price in the West dropped 21.4 percent compared to the third quarter of 2007. In the Midwest, prices declined 5.5 percent in the third quarter, the NAR said. In the South, prices dipped 3.7 percent, while those in the North East fell 6.5 percent.
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