Home Prices Fell in ’07 for First Time in Decades

It was a notable year for the housing industry, and not in a good way.

In 2007, the median price of an American single-family home fell for the first time in at least four decades, according to the National Association of Realtors, a trade group.

The median price declined 1.8 percent to $217,800, the first annual decline since reliable records began in 1968. “It’s the first price decline in many, many years and possibly going back to the Great Depression,” said the group’s chief economist, Lawrence Yun.

Over all, sales of previously owned single-family homes fell 13 percent in 2007, the biggest drop in a quarter-century. Last month alone, home sales dipped 2.2 percent from November, to a 4.89 million annual rate. (The group’s survey excludes newly constructed homes.)

Inventories of single-family homes and condominiums remain elevated, as the housing industry struggles to climb out of its worst downturn since the early 1990s. Though the backlog of unsold homes ticked down slightly in December, at least one economist attributed the drop to discouraged homeowners “pulling their homes off the market in the face of continued weak demand and falling prices.”

“We still have a long way to go before prices sink to levels necessary to balance supply and demand in the housing market,” the economist, Joshua Shapiro of MFR, a research firm, wrote.

Potential home buyers have stayed on the sidelines as they expect prices to drop further in 2008. Economists predict the housing market will not bottom out until the summer, and even then will remain sluggish.

The median price of a previously owned home was off 6 percent last month from December 2006, and sales of condominiums fell 25 percent.

The steepest decline in sales last month came in the Northeast, where sales fell 4.6 percent from November. Prices in the region were down 8.9 percent from December 2006.