Home prices up by 10.3%

Section: Money, Pg. 01b

Proving that a cooling market can still be a hot one, home prices scored double-digit gains in the first quarter of the year -- up 10.3% over the same quarter last year. The median sales price for an existing single-family house hit $217,900.

Normally, a 10% rise wouldn't signal a drop-off. But it does when compared with the fourth quarter of 2005, when the median price surged 13.6% from the same period of 2004. The first-quarter increase was down, too, from the pace for all of 2005, when prices rose 12.2%, after rising 8.3% (in 2004) and 7.5% (in 2003).

The figures released Monday by the National Association of Realtors confirmed that the housing market is gradually slowing, with sales easing, inventories rising and construction cooling.

Residential housing still remains vigorous by historical measures. In the first quarter, 60 metro areas showed double-digit price gains. That was down, though, from the fourth quarter of 2005, when a record 72 metro areas saw prices rise by double digits. The NAR also said the number of homes sold, including single-family houses, condos and co-ops, fell in the first quarter. Those sales had hit a record high in the second quarter of 2005.

In addition, the "sentiment" of home builders slid to an 11-year low in May, the National Association of Home Builders said Monday. Its NAHB/Wells Fargo Housing Market index -- which measures how home builders view current and future market conditions -- fell to the lowest point since mid-1995. David Seiders, the NAHB's chief economist, sees "an orderly cooling-down process."

The NAR agrees. The pace of price increases is slipping, it noted, even as many areas are still enjoying a robust housing market.

"For most metro markets, price appreciation is coming down," says Lawrence Yun, senior economist with the NAR. "The market is cooling, but to a very healthy market condition."

Jim Gillespie, CEO of Coldwell Banker Real Estate, predicts price appreciation will fall to single digits soon but doesn't see any collapse of prices nationally. "The boomers are still in their prime, and they'll be buying second homes," Gillespie says. "They'll be doing that for years to come."

Sixteen markets saw prices fall in the first quarter, including the Boston, Cleveland and Cincinnati metro areas. Median prices fell 1.5% to $390,400 in the Boston area; 3% to $126,800 in Cleveland; and 1.4% to $137,700 in Cincinnati.

Residential real estate remains red-hot in some pockets of the country, including the New Orleans area, which was devastated by Hurricane Katrina nearly a year ago.

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Top gainers, losers

Five highest- and lowest-growth markets measured by existing single-family home prices. Median prices (in thousands) in Q1 2006 and change from Q1 2005:

Highest Q1 '06Change Phoenix/Mesa$268.338.4% Orlando $260.5 34.0% Gainesville, Fla. $210.1 31.9% Ocala, Fla.$159.830.8% Virginia Beach/ Norfolk$221.1 27.1% Lowest Danville, Ill.$52.511.6% South Bend, Ind. $81.810.2% Akron, Ohio$104.26.3% Toledo, Ohio$103.55.7% Lansing, Mich.$128.35.1% Source: National Association of Realtors

(c) USA TODAY, 2006