U.S. Home Sales Accelerate as Prices Decline Amid Rebound

The third decline in U.S. home prices in three years is driving a pickup in sales as bargain hunters rush to buy before mortgage rates rise, even as values may slump further.

Mounting foreclosures pushed the median price for a U.S. existing home to $158,800 in January, the lowest level since 2002, according to the National Association of Realtors. At the same time, sales climbed 22 percent from October, the biggest three-month gain since the end of a homebuyer tax credit. The rally began as mortgage rates started to rise from record lows in November and the economic expansion picked up speed.

“The job market is beginning to gain traction, consumer confidence is improving, and even though mortgage rates have increased, they’re near historic lows,” said Mark Zandi, chief economist of Moody’s Analytics Inc. in West Chester, Pennsylvania. “Prices may go down a bit more, but we’re still seeing a pop in sales.”

Fannie Mae, the largest mortgage-finance company, forecasts home prices will fall further this year and sales will jump. Discounts on foreclosed properties are eroding the values of other homes, making houses more affordable and opening the market to more people. A sustained increase in sales may signal a bottom in values as prices fall to levels buyers can’t resist.