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Foreclosures push U.S. home prices to 5-year low

NEW YORK (Reuters) - Prices of existing U.S. single-family homes dropped a record 12.4 percent in the fourth quarter from a year earlier to the lowest level since 2003, the National Association of Realtors said on Thursday.

A foreclosure sale sign sits in front of a house in Falls Church, Virginia, just outside Washington D.C. July 23, 2008. REUTERS/Kevin Lamarque

The NAR said distressed sales, which includes foreclosures, accounted for 45 percent of transactions in that quarter, dragging down the national median price of existing single-family homes to $180,100.

The median is where half sold for more and half sold for less, and it was the lowest since the second quarter of 2003 when it was $177,900.

At the same time, existing-home sales rose in only six states from the fourth quarter of 2007, the NAR said.

In the fourth quarter, prices for single-family homes declined in 134 out of 153 metropolitan statistical areas from the same period in 2007, pulled down by active sales at the lower end that were driven by foreclosures, the NAR said.

The NAR said one metropolitan area was unchanged and 18 metropolitan areas reported price gains. The NAR’s data on metro area home prices dates back to 1979.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said homes and neighborhoods minimally impacted by foreclosures have moderate prices changes.

“Distressed home sales have risen from about 38 percent of transactions in the third quarter, meaning people are responding to discounted prices and are slowly absorbing the excess inventory,” he said in a statement.

“Buyers clearly see value in today’s pricing,” he said.

The NAR said total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 4.70 million units in the fourth quarter, down 6.4 percent from 5.02 million units in the third quarter, and are 5.9 percent below the 5.00 million-unit pace in the fourth quarter of 2007.

Lawrence Yun, NAR chief economist, said the market is clearly depressed from job losses and consumer concerns about the economy.

“Assuming housing provisions in the economic stimulus package are quickly enacted and provide enough encouragement for home buyers, we could see a quick lift in home sales for the critical spring home-buying season,” he said in a statement.

The largest sales gain in the fourth quarter from a year earlier was in Nevada, up 133.7 percent, followed by California which rose 84.7 percent, Arizona, up 42.6 percent, and Florida with a 12.5 percent increase, the NAR said.

Regionally, existing-home sales in the Northeast fell 11.9 percent in the fourth quarter to a pace of 760,000 units and are 13.9 percent below a year ago.

Existing-home sales in the Midwest dropped 9.3 percent in the fourth quarter to a pace of 1.04 million and are 12.4 percent below a year ago, the NAR said.

In the South, existing-home sales declined 7.3 percent in the fourth quarter to an annual rate of 1.73 million and are 13.4 percent lower than the same period in 2007, while in the West, existing-home sales rose 2.6 percent in the fourth quarter to an annual rate of 1.17 million and are 26.5 percent above a year ago, the NAR said.

Editing by Tom Hals

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