By Alan Zibel
Fewer deeply discounted foreclosures are being sold these days, and that means the median price of homes sold in the U.S. is on the rise.
The trend shows that the median — the midpoint between the highest and the lowest price of a home sold — is an imperfect measure of home prices. It can be skewed by shift in the mix of properties sold — a greater number of expensive properties sold in any given period means a higher median.
That said, the numbers coming out of the National Association of Realtors on Thursday were another bit of encouraging news for home owners and sellers, and for the broader economy.
The trade group said home prices posted the strongest quarterly increase in more than six years in the second quarter of the year. They actually rose in 75% of local markets.
Nationwide, the median price for single-family homes sold in the April-June quarter was $181,500, up 7.3% from the same quarter a year earlier, the Realtors’ group said. It was the biggest increase since the first quarter of 2006.
The improvement was seen around the country. Prices rose compared with last year in 110 out of 147 metro areas tracked by the Realtors’ group. Prices fell in 34 metro areas and were unchanged in three. In the first quarter, median prices rose in 74 cities.
Lawrence Yun, the trade group’s top economist, acknowledged that part of the price increase has resulted from fewer sales of lower-priced homes, where there is less inventory available. Nevertheless, Mr. Yun said it is “most encouraging to see a growing number of metro areas with rising median prices” because it is helps homeowners who owe more on their properties than their homes are worth to rebuild equity.
In the second quarter, however, home sales declined slightly, dipping 0.7% on a quarterly basis. They were up 8.6% from the same quarter a year earlier.
The metro areas showing the biggest increase in median prices from a year earlier were Detroit (29.2%), Phoenix (29%) and Boise, Idaho (21.7%). Areas showing big price declines were Bridgeport, Conn. (-12.9%), Edison, N.J (-9.5%) and Gulfport, Miss. (-9.4%).
Nationwide, “distressed property,” including foreclosures and homes at risk of foreclosure, accounted for 26% of second-quarter transactions, down from 33% a year earlier, the Realtors’ group estimated.
Realtors want to keep the market’s recovery going and are hoping banks will loosen their standards so that more potential buyers can get credit. “With gains apparent in all of the price measures, banks also should have more confidence in expanding mortgage credit to home buyers using safe but sensible standards,” said the group’s president Moe Veissi, owner of Veissi & Associates Inc., in Miami.