All Blog Posts from Econwatch

A real estate group says home prices fell in eight out of every 10 U.S. cities in the third quarter of this year as heavily discounted distressed sales made up 30 percent of all deals.

But home sales continued their climb, with quarterly sales outpacing the second quarter and the previous year's figures, the National Association of Realtors said Tuesday.

The median sales prices of existing homes declined in 123 out of 153 metropolitan areas compared with the same period a year ago. Prices rose in the other 30 cities.

The national median price clocked in at $177,900, or 11 percent below the third quarter last year.

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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After telling the world that assuming your personal financial conditions allow for it, the time is ripe for a home purchase, I started to actively look about a month ago. The process has been an excellent way to experience the highs and lows of the real estate market.


We found a smart and savvy agent, whose greatest asset was that she had entered the real estate market during a persistent period of weakness. She started our first outing by asking what we were looking for and then she said, "I'm going to spend the first half of the day showing you where the market is, so you can refine your search."

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U.S. banks "are slow" to absorb losses on commercial real-estate loans, according to a Federal Reserve analyst. That's stoking fears that banks will face a crisis similar to the one fueled by the collapse of the residential housing market.

According to a Wall Street Journal report ($) Wednesday, a Fed real-estate expert told banking regulators last month that "banks will be slow to recognize the severity of the loss - just as they were in residential."

Commercial property values are down along with rental payments, pummeling lenders. But instead of taking hits on bad loans immediately, many banks are "extending loans when they come due even if they wouldn't make those loans now," the Journal states.

"There's been an extend-and-pretend philosophy by banks to forestall hits to their balance sheets that might occur," Patrick Phillips, new chief executive of the Urban Land Institute, told the Journal.

A Journal analysis also finds that banks heavily exposed to commercial real estate are keeping less cash on hand to cover bad loans – setting aside just 38 cents in reserves for every $1 in loans during the second quarter. That's down from $1.58 in extra capital for every dollar in bad loans at the beginning of 2007.

According to the Fed presentation, commercial real-estate losses are expected to hit 45 percent next year.

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In the last week, a slew of economic reports and news articles have suggested that the U.S. housing market has bottomed out.

Don't believe it. More pricey areas, often in large metro areas, still have plenty of room to fall.

You wouldn't know it from Tuesday's release of the National Association of Realtors' index, which showed that nationally pending home sales had increased from the levels of one month ago.

Also on Tuesday, homebuilder D.R. Horton reported smaller losses, a day after Pulte Homes Inc. and Centex Corp. said that orders for new homes had been increasing.

And there was plenty of excitement last week after the S&P Case Shiller index seemed to show a mild rise in month-over-month prices for existing single family homes.

Well, not so fast. In reality, the seasonally-adjusted version of the Case Shiller index – which came out later in the day, after the initial headlines had been written -- reveals a continued month-to-month decline from April to May. And the year-over-year decline remains around 17 percent.

The reason to expect further declines in some areas is that the U.S. housing market has now bifurcated. It's true that some areas with lofty rises (and subsequent severe falls) may have stabilized.

Not so some of the more expensive areas, especially those in metro areas with houses that are over $750,000, which also experienced skyrocketing prices (a two- or three-fold increase since 2000 wasn't unusual) but are taking much longer to revert to normal.

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Pending home sales climbed for the third straight month, boosted by low mortgage rates and a first-time homebuyer tax credit, according to the National Association of Realtors.

The real estate group's Pending Home Sales Index, which is based on contracts signed in April, rose 6.7 percent from its March reading to 90.2. April's data also showed a 3.2 percent improvement from a year ago.

“Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” Lawrence Yun, NAR's chief economist, said in a statement. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers."

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