Summer-quarter home values off

WASHINGTON - U.S. home prices fell in the July-to-September quarter for the first time since 1994, according to government figures released yesterday that provide fresh evidence of the housing-market slump.

"The housing price boom that we witnessed over the last several years is gone, and it is never coming back," said Michael Darda, chief economist of MKM Partners L.L.C., of Greenwich, Conn. "Home prices will underperform the inflation rate for an extended period of time."

Prices dipped 0.4 percent nationwide in the third quarter from the second quarter, the Office of Federal Housing Enterprise Oversight said.

The Philadelphia area did better than the national average - with prices in the city and its four surrounding counties in Pennsylvania rising 0.31 percent from quarter to quarter, and prices in the three South Jersey counties gaining 0.50 percent.

Both areas also rose significantly more than the nation from the third quarter last year to the third quarter this year: a 3.19 percent rise in home prices for the five Pennsylvania counties, and a 3.05 percent increase in South Jersey.

U.S. home prices posted an increase of 1.8 percent, the smallest year-over-year increase since 1995, according to the agency, which oversees the big mortgage-finance companies Fannie Mae and Freddie Mac.

"While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country," agency director James B. Lockhart said. Prices declined in 21 states, the housing oversight office said.

Pennsylvania home prices rose 0.65 percent from the second quarter and 4.09 percent year-to-year. In New Jersey, prices fell 0.29 percent for the quarter and rose 0.86 percent for the 12 months.

The survey covers refinancings and sales of new and existing homes.

The first quarterly decline nationally since 1994 in the federal agency's House Price Index did not surprise David Resler, chief economist at Nomura Securities International Inc., of New York.

"Our assumption is that a declining trend will now set in" that will mirror declines in other indexes of home prices, he said. "The question is whether sellers are lowering their asking price enough to move the property."

Also yesterday, the Commerce Department released October numbers that showed the median sales price of a new home fell 13 percent for the month compared with October 2006 - to $217,800. It was the biggest year-to-year decline since September 1970 in the median price, the point at which half of homes sell for more and half for less.

In a third housing report yesterday, a mortgage research firm said U.S. foreclosure filings nearly doubled in October from the same month last year. A total of 224,451 foreclosure filings were reported in October, said RealtyTrac Inc., of Irvine, Calif.

In Pennsylvania, there were 3,170 foreclosure filings last month, up 17 percent from October 2006. New Jersey filings totaled 4,844, down 1 percent from a year ago.

According to the housing oversight agency's data, many of the cities and states experiencing the sharpest declines in the third quarter were the same areas that had posted the largest increases during the housing boom of the late 1990s and early 2000s.

Price declines year-to-year were steepest in Michigan (down 3.7 percent), California (3.6 percent), Nevada (2.4 percent), Massachusetts (2.3 percent), Rhode Island (2.2 percent) and Florida (2.1 percent).

"Rising inventories of for-sale properties," said Patrick Lawler, the agency's chief economist, "are clearly having a material impact on home prices."

The OFHEO index is calculated solely using home loans of $417,000 or less that are bought or backed by Fannie Mae and Freddie Mac. It is important to note that that excludes properties bought with some of the riskier varieties of home loans that have gone sour this year.