By Kathleen M. Howley
Bloomberg News
Thursday, November 22, 2007

Home prices fell in one-third of U.S. cities last quarter as tighter lending standards caused a 14 percent decline in sales nationwide.

Prices declined in 54 of 150 areas in the third quarter, with the median sales price falling 2 percent nationwide, the National Association of Realtors said yesterday. Home sales, including single-family properties and condominiums, fell to an annualized 5.42 million units from 6.29 million units a year ago.

In the Washington area, the median price in the quarter was $438,000, up 1.3 percent from $432,200 a year earlier.

Declines in sales and prices signal that the slump that began in 2006 may extend into a third year, matching the slowdown 18 years ago that ended in the 1991 recession.

"Prices have to continue to fall to deplete a bloated inventory," said Richard Yamarone, chief economist at Argus Research in New York. "The only surprise in housing would be if we didn't see the slump extend into 2008."

Ninety-three U.S. cities had price gains, and three were unchanged from a year ago, the report said.

The U.S. median home price, which is the point at which half the homes sold for more and half for less, was $220,800, down from $225,300, the association said. In the second quarter, prices fell in 50 of 149 cities and the national median dipped 1.5 percent.

Palm Bay, Fla., had the biggest decline, falling 12.4 percent. Prices fell in Sacramento by 10.5 percent, and Sarasota, Fla., dropped 10.4 percent.

The largest price increase was in Bismarck, N.D., up 15.1 percent, followed by Salt Lake City, 14.1 percent, and Yakima, Wash., 13.6 percent.

Home sales fell in all the states covered by the report and the District. Data were not available for New Hampshire and Idaho.

Nevada led the sales drop, at 35 percent. Florida was second, at 32 percent and Arizona, 31 percent.

The U.S. residential market is faltering as rising foreclosures among subprime borrowers have pushed down prices and led to a record supply of unsold homes. Foreclosures among homeowners with subprime adjustable-rate mortgages have reached a five-year high.