By Alexa Jaccarino
Home prices fell to their lowest point in more than a decade in January, which helped to lift the pace of home sales, according to a report from an industry trade group.
The National Association of Realtors reported that the median home price in January fell 2% from December to $154,700, the lowest price reading since November 2011, just before the run-up in home prices that became known as the housing bubble.
Dragging down the existing home prices is a large inventory of distressed home sales, which includes homes in foreclosure and so-called short sales. Distressed home sales made up 35% sales in January, and are expected to cause prices to continue to fall through the first half of 2012. As one expert explains, “The recent agreement between the big mortgage servicers, state attorneys general and the Obama administration will also result in more homes going to foreclosure over the next few months, adding to downward pressure on prices.”
The housing market has however, been showing signs of recovery in recent months. The combination of low mortgage rates and a decline in home prices means homes are more affordable than they’ve been in decades. The seasonally-adjusted annual sales pace rose to 4.57 million homes, its highest level since May of 2012, helped by these rock-bottom mortgage rates. These are all signs of a market upturn, although the recovery is expected to remain a long process. [CNN Money]
