Distressed properties gallop, home prices stumble

According to a report just released by the National Association of Realtors (NAR), the steep slide in home price accelerated at a record pace during the first three months of 2009 in the largest year-over-year decline in the 30-year history of the report. 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. NAR says that first-time homebuyers, who are often entry-level buyers, accounted for about half of all purchases during the quarter, and that 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, and 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. 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."