Home Prices Plummet on Fewer High End Sales

Washington, DC, May 13, 2008--Single-family home prices in the first quarter fell by the largest year-over-year amount since at least 1982, according to the National Association of Realtors.

Prices fell 7.7 percent in the first quarter, the largest year-over-year decline since the since the NAR began reporting prices in 1982.

The median sales price fell to $196,300, down 4.8 percent compared with the last three months of 2007.

Lawrence Yun, the chief economist of NAR, said much of the record decline was due to liquidity problems in high priced markets.

"These are highly unusual results because there were very few jumbo loan originations in the latest quarter," he said. "So sales are much slower in high-cost areas."

For example, In California, Yun said, homes bought with jumbo mortgages - more than $417,000 - accounted for 40 percent of all sales before the turmoil in the market last summer. Since then only 10 percent of sales in California involved jumbo loans.

Many of these same markets were also among the hardest hit by the subprime implosion, which forced many lower priced homes back on the markets, again dragging down NAR's results.