Tax credit bumps up house prices

August 12, 2010|Alan Zibel, Associated Press

WASHINGTON — Home prices rose in nearly two-thirds of US cities this spring as buyers took advantage of tax incentives that gave the struggling housing market a temporary jolt.

The median sales price for previously occupied homes rose compared with last year in 100 out of 155 metropolitan areas tracked in the April-to-June quarter, the National Association of Realtors said yesterday. That compares with 91 out 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 for June fell and are expected to plunge further for July. Prices are likely to follow in the second half of the year.

The lowest mortgage rates in decades have not been enough to energize buyers. Home loan applications were virtually flat last week, the Mortgage Bankers Association said yesterday.

The national median price of a home 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, because families with children traditionally move during the summer and buy larger homes.

Home sellers, meanwhile, are cutting 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 price at least once, according to real estate website Trulia.com, which collects data from around the country.