By Alan Zibel
AP Real Estate Writer
Washington — Home prices rose in nearly two-thirds of U.S. cities this spring as buyers took advantage of tax incentives that gave the struggling housing market a temporary lift.
The median sales price for previously occupied homes rose compared with last year in 100 of 155 metropolitan areas tracked in the April-to-June quarter, the National Association of Realtors reported Wednesday. That compares with 91 of 152 cities in the January-to-March quarter. Fourteen cities had double-digit price increases.
But the boost to the housing market in the second quarter faded shortly after tax credits expired at the end of April. Home sales fell in June and are expected to plunge further in July. Prices are expected to follow in the second half of the year.
The lowest mortgage rates in decades haven’t been enough to energize buyers. Home loan applications were virtually flat last week, the Mortgage Bankers Association reported Wednesday.
The national median price in the second quarter was $176,900, up from $174,200 in the same quarter last year and up from $166,400 in the January-to-March period.
The median price is the midpoint, which means half of the homes sold for more and half for less. It typically falls in the winter and rises in the summer months. That’s because families with children traditionally move during the summer and buy larger homes.
Home sellers, meanwhile, are being forced to cut their asking prices as demand remains weak. Among sellers who listed homes for sale at the start of this month, 25 percent had dropped their prices at least once, according to real estate website Trulia.com, which collects data from around the country.
That percentage had fallen as low as 19 percent in March, when tax credit-fueled sales were booming. The biggest problem, said Pete Flint, CEO of Trulia, is the lack of jobs.
“Until the employment market stabilizes, we don’t see stabilization in the housing market,” he said.
In the Realtors report, the largest price gain was in Akron, Ohio. Prices there were up 36 percent from a year ago. The San Francisco and San Jose areas, which have mounted a strong rebound from the housing bust, also had prices rebound by about 25 percent. Prices in the Riverside, Calif. metro area were up 18 percent from a year ago.
The biggest price drops were in Cumberland, Md.; Tucson, Ariz.; Ocala, Fla.; and Beaumont-Port Arthur, Texas. Prices in those cities were down at least 13 percent from last year.
If the broader economy sinks back into a recession, the housing situation will get a lot worse.
Celia Chen, senior director of Moody’s Analytics, projected that home prices could drop another 20 percent by early 2012 if there is another recession. If the economic recovery remains on track, she said she sees prices falling another 5 percent and hitting bottom early next year.