Home prices slide 14%

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NEW YORK (CNNMoney.com) -- The steep slide in home price accelerated at a record pace during the first three months of 2009, according to an industry report issued Tuesday.

The national median home price of single family homes sold during the first quarter fell 13.8% to $169,000 year over year, and 6.2% compared with the last quarter 2008, according to the National Association of Realtors (NAR). That was the largest year-over-year decline in the 30-year history of the report.

NAR attributed much of the loss to two factors: First-time homebuyers, who are often entry-level buyers, accounted for about half of all purchases during the quarter. And many buyers took advantage of the deeply discounted prices of foreclosed properties and short sales. These "distressed properties" typically sell for 20% less than traditional homes, according to NAR. These homes also accounted for about half of all transactions.

"Traditional homes in good condition have held their value much better, so owners shouldn't be overly concerned about median prices," said NAR president Charles McMillan, in a prepared statement.

Sales volume was weak as well. Homes sold at a 4.59 million annualized rate during the quarter, off 3.2% from the last three months of 2008 and down 6.8% from first quarter 2008.

NAR's chief economist, Lawrence Yun, characterized it as a lull before an upturn. "Housing affordability conditions are at record high levels, " he said, "and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas."

Pat Newport, a real estate analyst with IHS Global Insight found NAR's state sales volume statistics especially telling - and far from positive. "That tells me the market is still not healthy," he said.

Year-over-year sales volume increased substantially in only a few states, mostly one-time boom areas. Sales were way up in Nevada (116.8%), California (80.6%), Arizona (50.2%) and Florida (25%), as well as Virginia (12.2%) and Minnesota (11.9%). Everywhere else they were down for the year.

"Where prices are down the sharpest, sales volume is up the most," said Mike Larson, a real estate analyst for Weiss Research. "In the post-bubble markets, we've seen more rationality come in."

"Middle income workers can now actually buy a home without having to stretch or get themselves into some crazy mortgage," he added. "Declining prices are not part of the problem, they're part of the solution."

Among 152 individual metro areas covered by the survey, only 18 reported year-over-year price gains. In Cumberland, Md., prices grew 21.1% to $114,900, the biggest gain of any market.

The second best performance was achieved by Davenport, Iowa, where the median price jumped 13.8% to $100,300 during the quarter. In Columbia, Mo., prices grew 6% to $152,600.

Cape Coral, Fla., posted the biggest drop year-over-year; prices fell 59.1% to $87,300. In Saginaw, Mich., the median cost of a home plunged 53.7% to $30,300, making it the lowest-priced market covered by NAR. In Akron, Ohio, the median priced home sold for $50,100, down 48.7%.

Regionally, prices fell the most in the West at 19.8%. They were down 15.9% in the Northeast, 10.8% in the South and 6.8% in the Midwest.

Despite the increased affordability, Larson does not forecast a return to a normal market until the end of 2010. Until then, he said, "Buyers will continue to have the upper hand."