Home prices drop for third straight quarter

NEW YORK (CNNMoney.com) -- U.S. home prices fell for their third straight quarter, according to an industry report released Tuesday.

The median price of a single-family home fell 1.8 percent to $212,300 for the three months ended March 31, compared with the first quarter of 2006, according to the National Association of Realtors (NAR).

It was the third consecutive quarter of decline, and prices are now down 6.5 percent from their peak of $227,100 in 2006.

The home price report revealed a broad but shallow pattern with prices declining over every region but by no more than 2.8 percent, which occurred in the Midwest.

The first-quarter drop follows an overall 2.7 percent slump in the fourth quarter of 2006, which was the biggest year-over-year drop on record.

NAR President Pat V. Combs said in a statement that the flattening in home prices is encouraging.

"It appears the worst of the price correction is behind us," she said. "More stable home prices and declining mortgage interest rates are increasing buying power, which should encourage potential buyers who've been on the sidelines."

NAR's senior economist, Lawrence Yun, also took an optimistic view of the report. "Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction," he said in a statement.

The trade group is still predicting a recovery during the second half of this year but overall, it has forecast that prices will end 2007 down, the first time prices fell over a full calendar year since NAR began compiling records in 1967.

NAR asserted that the price stats exaggerate the actual home price decline. Unit sales have fallen far more in high-priced areas than in low-priced ones, essentially shifting the mix and pulling down the median price nationwide, it said.

Some of the worst hit metro areas were in Florida, where Sarasota, in particular, got pounded. Single family home prices plummeted 12 percent there to $337,000. Palm Bay prices dropped 8 percent to $191,300 and Cape Coral 3.9 percent to $256,900.

Other metro areas around the nation that suffered particularly stiff drops included New Orleans (down 10.9 percent to $155,900) and Reno (-8.9 percent to $325,700).

Condo prices fell even more in some locales. Palm Bay condos plunged 22.0 percent to $119,700 and Cape Coral fell 17.9 percent to $242,900.

The top performing condo market was Salt Lake City, where prices grew by 25.6 percent compared with a year ago to $164,600. Another Mountain State metro area, Albuquerque, recorded a condo price gain of 17.9 percent to $147,100.

Unit sales also slumped. During the first quarter, homes - including condos - sold at a seasonally adjusted annual rate of 6.4 million units, down 6.6 percent from the 6.9 million annual rate of a year ago.

The most expensive market for single family homes continues to be San Jose. The median house there sells for $788,000, up 4.4 percent compared with last year.

Elmira, New York, at $75,300, recorded the lowest median home prices in the nation.