US Home Prices Drop in 3rd Quarter

Posted: Dec 02, 2010 |

Opportunistic home buyers and investors could take another round of good news. They could now scout the market anew in search of properties that come with lower price tags. Home-buying activity is expected to pick up again after this development.

Home prices in the US went down by 3.2% in July to September compared to prices in the same period last year, according to the Federal Housing Finance Agency. The decline in home price tags was attributed to weaker demand as consumers logically opted to stall home-buying activities without tax credits.

Sales of homes dropped to record-low levels following the expiration of tax credits of up to $8,000 for homebuyers, which was implemented starting April 30. Analysts said home prices in the country are expected to further drop due to the increase in number of distressed properties and a constant climb in unemployment rate, which nears 10%.


Other observers forecast up to 8% in home price decline by the third quarter of 2011. They added that the expectation is in line with the brim outlook in several market factors, which may affect home-buying demand and activities.

Compared to the second quarter ending June 30, third-quarter home prices dipped 1.6%. During the period, economists and market experts had forecast a decrease in home prices by 1.1%.

The federal agency and several analysts added that the third-quarter figures do not appropriately reflect the effect of a recent foreclosure freeze from major mortgage providers like JP Morgan Chase and Bank of America. Home lenders in September suspended seizure and even resale of delinquent homes over allegations that they mishandled foreclosure processes.

The federal agency's report was based on actual sales information that compares same-property prices over time. The data does not include refinance transactions and jumbo mortgages, which exceed Freddie Mac's and Fannie Mae's $729,750 conforming loan limit.

The national price index fell 0.7% in September compared to price index in August. Comparative home prices from July to August were unchanged. It was revised from an initial report of a 0.4% increase.

Median price of existing homes for sale in October was $170,500. It was down 0.6% compared to median price in September and lower by 0.9% compared to the same period last year.

Meanwhile, home prices also dropped in 40 states in the quarter ending September compared to year-ago figures. The list of states with drastic home price declines was spearheaded by Idaho, Georgia, and Arizona.

For more news about the housing market, visit ForeclosureConnections.com.

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