According to the National Association of Realtors® (NAR) home sales rose in every state during the third quarter compared to the same period one year earlier but prices continued to decline.   The median price of a single family home declined from the third quarter of 2010 in 111 of the 150 metropolitan statistical areas (MSAs) tracked by the Association and rose in 39.  In the second quarter 41 MSAs had annual price gains.

Lawrence Yun, NAR chief economist said that the market is holding fairly even.  "Home sales need to recover first - only then can prices stabilize.  Existing-home sales are little changed from the second quarter but are notably higher than a year ago," he said.  "The good news is inventory levels have been trending gradually down."

Home sales which include single family residences, condominiums, and cooperative apartments, were down nationwide by 0.1 percent to a seasonally adjusted annual rate of 4.880 million units compared to 4.883 million in the second quarter but this was 17 percent above the 4.170 million pace recorded during the third quarter of 2010.   That quarter, it should be noted, began just as the popular homebuyer tax credits expired.

Every state posted a gain but in 45 states (including the District of Columbia) those increased sales over a year ago were in double digit territory.  The greatest increases were in North Dakota (+39.1 percent), Utah (+38.2 percent), and Nebraska (36.1 percent).  On a regional basis, sales in the Midwest were up 25.1 percent, 16.7 percent in the West, 15.5 percent in the South, and 11.6 percent in the Northeast.

Median prices nationally declined 4.7 percent from 177,800 in the third quarter of 2010 to $169,500 in the most recent period.  Distressed homes accounted for 30 percent of home sales compared to 33 percent in the second quarter and typically sold at a discount of about 20 percent.

NAR noted that median prices are a reflection of the types of homes that are selling and can be misleading at times because the level of foreclosures can vary notably in given markets.  Annual price measures generally smooth out any quarterly swings.

Metropolitan area median condominium and cooperative prices were $167,600 in the third quarter, down 2.2 percent from the third quarter of 2010.  Twelve metros of the 54 MSAs tracked by NAR showed increases in the median condo price, the remaining 42 declined.

The median existing single-family home price in the Northeast fell 6.5 percent from the third quarter of 2010 to $236,700.  In the Midwest and the South median prices declined 2.2 percent to $142,300 and $153,200 respectively.   The median existing single-family home price in the West dropped 9.0 percent to $205,700 in the third quarter from the same quarter of 2010.  "Western home sales are dominated by cash investors in the lower price ranges," Yun explained.

NAR's Housing Affordability Index which measures the relationship between median home price, median family income, and mortgages interest rates stood at 183.8 in the third quarter, the second highest on record behind the first quarter of 2011.  The higher the index, the greater the household purchasing power. 

Twenty-nine percent of home purchases during the quarter were all cash compared to 30 percent in the second quarter and 29 percent one year earlier.  Investors, who make up the bulk of cash purchasers, accounted for 20 percent of transactions in the third quarter compared to 19 percent in both the second quarter and a year ago.

First-time buyers purchased 32 percent of homes, down from 35 percent in the second quarter and 34 percent in the third quarter of 2010.  Historically, entry-level buyers are responsible for about 40 percent of home purchases. 

NAR President Ron Phipps said home sales should be notably higher given the buying power in today's market.  "Housing affordability conditions have been at a record high this year, rents are rising and homes are selling for less than the cost of construction in most of the country.  For people with secure jobs, good credit and long-term plans, today's conditions will be remembered as a golden opportunity to enter the housing market."