Housing Markets Take Turn for the Worse in First Quarter

Despite realtors’ best efforts to paint the national housing picture as mixed — or even to explain away its own data — the latest quarterly housing survey by the National Association of Realtors painted an unmistakeable picture of a housing market under increasing duress. The NAR said Tuesday that 100 of 149 key metropolitan statistical areas posted price declines during the first quarter; in the fourth quarter, only 77 MSAs did so — meaning that the incidence of price declines grew by nearly 30 percent quarter-over-quarter.

All of which seems to make the NAR’s insistence that housing is defined by local markets more quixotic than usual, considering that more local markets than ever are facing increasing pricing pressure.

“It’s more important than ever to examine what’s happening with home prices at the city and neighborhood level,” said NAR president Richard Gaylord. “The old real estate mantra of ‘location, location, location’ is perhaps more relevant today than ever before.”

In the first quarter, the median existing single-family home price as calculated by NAR was $196,300, down 7.7 percent from one year ago, and off 4.8 percent from the fourth quarter alone. NAR economist Lawrence Yun said the drop in prices was due a dearth of jumbo mortgage transactions in the first quarter — the same explanation the relator-led organization gave for the fourth quarter price decline.

“These are highly unusual results because there were very few jumbo loan originations in the latest quarter, so sales are much slower in high-cost areas, and at the same time foreclosures related to subprime mortgages rose,” he said.

Yun also suggested that its numbers “don’t tell the whole story.” The NAR has been characterizing its pricing data as “unusual” for well over a year now; more than a few mortgage industry participants say the organization has cost itself credibility, as a result.

“It shouldn’t be unusual at this point to see prices drop, or become more widespread in terms of affected markets,” said one source, a senior executive at a large commercial bank. “If anything, what would be unusual is seeing prices increase, which seems to be the realtors’ baseline.”