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Home Prices Fall in 77 U.S. Metro Areas, Realtors Say

Home prices fell in the fourth quarter in the majority of U.S. metropolitan areas surveyed by the National Association of Realtors, according to a report today.

The median sale price of a U.S. home dropped 5.8 percent to $206,200 in the last three months of 2007 from $219,000 in the same period of 2006, the realtors group said today. Prices fell in 77 of 150 metropolitan areas, the most since the group began tracking values in 1979. The decline was 10 percent or more in 16 metro areas, the Chicago-based realtors group said.

``Clearly we have not seen the end of the price weakness because there is a huge overhang of unsold homes,'' said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. ``I think some of the weakness will spill over into 2009.''

Prices have fallen more than 10 percent since their July 2006 peak in the worst U.S. housing slump in 26 years as the number of unsold homes has grown and prospective homeowners had a tougher time getting home loans. As many as 15 million U.S. households may owe more on their mortgages by the end of this year than their homes are worth, according to an estimate by Jan Hatzius, chief U.S. economist at New York-based Goldman Sachs Group Inc.

The inventory of unsold homes was 3.91 million in December, according to the realtors group. The average number since 2000 is 2.67 million.

Fewer Loans

Lenders made 14 percent fewer loans in 2007 than they did in 2006, according to the Mortgage Bankers Association in Washington. They made 28 percent fewer jumbo loans, which cover homes with values greater than $417,000 and typically cost more, according to Inside Mortgage Finance, a Bethesda, Maryland-based industry newsletter.

``The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,'' said Lawrence Yun, the association's chief economist. ``Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets.''

The economic stimulus package signed by President George W. Bush this week will raise the jumbo loan limit to $729,750.

All five regions of the U.S. experienced price declines, led by the West with 8.7 percent. The drop was smallest in the Midwest, at 3.2 percent, the realtors group said.

Michigan Metro Area

The metropolitan area with the deepest decline was Lansing- East Lansing, Michigan, which had a 19 percent decrease. Prices fell 18.5 percent in the Sacramento, California, region and 17 percent in Riverside and San Bernardino, California -- the so- called Inland Empire -- and in the Jackson, Mississippi, region, the group said.

In the New York, Northern New Jersey-Long Island area, the median price for an existing single-family home fell 1.1 percent to $457,400.

Of the 73 areas with price increases, 11 had gains of 10 percent of more. The greatest was in the Cumberland, Maryland, area, at 19 percent. The areas around Yakima, Washington, and Binghamton, New York, had 18 percent and 15 percent jumps respectively.

Prices in the Atlantic City, New Jersey, area rose 11 percent in the quarter, according to the association.

Median home prices ranged from $72,600 in the Youngstown, Ohio, region to nearly 12 times that amount in the Silicon Valley area of California, where the median price was $845,300, the group said.

In the fourth quarter of 2006, home prices fell in 73 of 149 metropolitan areas, said association spokesman Walter Molony.

U.S. home sales fell 21 percent in the last three months of 2007, according to the report. The West saw the biggest drop, with 28 percent. Nevada, Wyoming, New Mexico, Arizona, Oregon and Utah all had sales declines of more than 30 percent, the realtors said.

Home sales fell 18 percent in the Northeast, with Connecticut (22 percent), New Jersey (9 percent) and New York (9 percent) all experiencing declines.

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net .

http://www.bloomberg.com/apps/news?pid=20601087&sid=ah7CehSs2PCk&refer=home
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