Home values fell in almost three-fourths of U.S. cities in the second quarter as foreclosures that sell at cut-rate prices devalued real estate.
The median price of a single-family home declined in 109 metropolitan areas out of 150 measured, the National Association of Realtors said in a report today.
Real estate values are dropping as foreclosures undermine prices. Almost a third of homes sold in June were distressed properties, meaning foreclosures or short sales, in which a bank agrees to a sale for less than the loan balance, the Chicago-based Realtors group said last month. The mortgages on 6.5 million U.S. homes had late payments or were in foreclosure in June, according to Lender Processing Services Inc. in Jacksonville, Florida.
Banks are “not in the business of owning homes, so they’ll sell them at fire-sale prices,” said Patrick Newport, an economist with IHS Global Insight in Lexington, Massachusetts. “That forces sellers of other homes to compete with them, and in order to do that they have to lower their prices.”
The biggest second-quarter declines were in Salem, Oregon, where the median price fell 23 percent, and Minnesota’s Minneapolis and St. Paul region, where values dropped 18 percent.
The best-performing cities were Cape Coral and Fort Myers, on Florida’s west coast, which were up 18 percent, and Elmira, New York, which gained 16 percent.
The median price of a single-family home in the New York metropolitan area fell 2.3 percent in the second quarter. Boston had a decrease of 1.4 percent, the Realtors said in the report.
Sales of previously owned homes dropped in June to 4.77 million at an annual pace, a seven-month low, the National Association of Realtors said on July 20. New-home sales declined to an annualized rate of 312,000, according to the U.S. Commerce Department. That pace, were it to represent the full year, would give 2011 the lowest level on record.