Good News ! Housing Prices Climb

Home prices rose in 100 U.S. cities in the second quarter as a buyer tax credit boosted demand and distressed properties made up a smaller portion of sales.

The median price of a single-family home sold in Akron, Ohio, climbed 36 percent from a year earlier to $119,700, the biggest rise of 155 cities measured, the National Association of Realtors said in a report today. Prices in San Jose, California, gained 26 percent to $630,000 and San Francisco added 25 percent to $591,200. The median U.S. price rose 1.5 percent to $176,900.

Much of the demand was created by the housing stimulus tax credit. The effect is largely temporary, although welcome.

 Richard DeKaser, chief economist at Woodley Park Research in Washington noted “Throwing a sale price on housing stimulated demand, but there is no doubt it’s been a largely temporary effect,” DeKaser said in a telephone interview. “The level of housing activity, whether one is talking about sales or construction activity, is abysmally low.”

The National Association of Realtors (NAR) reported on their website that transactions probably would fall to a 4.55 million pace in the three months ending in September.

Distressed homes, which typically sell at a discount, accounted for 32 percent of sales in the second quarter, down from 36 percent a year earlier, according to the NAR. The category includes foreclosed homes, those where the owners have fallen behind on payments and so-called short sales, in which a lender agrees to sell a property for less than the value of its mortgage.

The worst performing markets included Cumberland, Maryland, with a price decline of 15 percent; and Tucson, Arizona, down 14 percent. Prices in Lansing, Michigan; Ocala, Florida; Beaumont, Texas; and Boise City, Idaho, all fell 13 percent.

The tax credit helped spurred activity, the question now is what's next.