NAR: Home prices down 7.7% in Q1 2008; Record number of metros showing YOY drops

The National Association of Realtors just released their data on Q1 2008 home prices. Median home prices fell 7.7% from a year earlier for the United States as a whole. That was worse than the 2.7% decline in Q4 2007. Some more details:

* The West led the declines with a -12.3% change, followed by the Midwest at -7.9% and the South at -7.5%. Only the Northeast notched a gain of +3.2%.

* The biggest year-over-year price gains, by metropolitan area: Binghamton, NY at +11.8%, Peoria, IL at +10.4%, and Spartanburg, SC at +10.1%. Other scattered gainers were located in New York, Texas, and Illinois.

* The worst performers were cities like Sacramento-Roseville, CA (-29.2%), Riverside-San Bernardino, CA (-27.7%) and Lansing-E.Lansing, MI (-26.9%). Other "biggest loser" markets were concentrated in California, Florida, Ohio, and parts of the Southwest.

* All told, prices fell from year-ago levels in 100 of the 149 (67.1%) metropolitan areas surveyed. That compares to 77 of 150 (51.3%) metro areas in Q4 2007. Prices are now falling in more metro areas than at any other time since the NAR began collecting this information in 1979.

As the housing slump enters its third year, home price declines are both deepening and broadening. Price declines have accelerated in markets that were overrun by speculators during the boom, including many parts of California and Florida. Meanwhile, the "losers list" of declining markets has expanded -- so much so that a record number of metropolitan areas are showing year-over-year price drops.

I believe the economic slowdown, which is causing unemployment to rise in a broader array of communities, is to blame. Another contributing factor is the credit crunch, which is curtailing financing options for borrowers all around the country. The silver lining to this dark cloud? The faster and farther prices fall, the sooner bargain hunters will be lured off the sidelines -- and the less time it will take to get housing supply back in line with demand.