The real estate market is returning to normal

Home prices rose in more than half of U.S. metropolitan areas in the first quarter of 2012 as the residential market continued to show signs of stabilizing after nearly six years of price declines.

The median price for an existing, or previously owned, home rose in 74 of the 146 markets tracked by the National Association of Realtors during the January-to-March period. The trade group, which issued its report Wednesday, said the latest trend represented a significant change from the fourth quarter, when home price rose in just 29 metropolitan areas.

The NAR said the last time prices increased in more markets than decreased was in the fourth quarter of 2010, after a federal tax-credit program for home buyers expired. The credit had temporarily lifted prices and sales, but prices began falling again in early 2011. But excluding the tax-credit period, which some economists argue was an artificial boost, prices haven’t risen in so many metro areas since the third quarter of 2007.

The U.S. had 2.37 million existing homes for sale at the end of March. That was down 22% from a year ago and 41% from the peak in mid-2007, the National Association of Realtors reported Wednesday.

First-quarter home sales, meanwhile, were up 5.3% from a year ago.

The combination of improving sales — coming off one of the worst years ever for home sales — and declining inventories is helping prices.

NAR says median existing single-family home prices rose in 74 of 146 U.S. markets in the first quarter, while they fell in 72 areas. In last year’s fourth quarter, 29 markets showed gains from a year earlier.

“Given the steadily dwindling supply of inventory and notably higher listing prices … prices are expected to show further improvements,” says Lawrence Yun, NAR chief economist.

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