Aug. 12--Although second-quarter sales of new and existing homes in the Philadelphia eight-county area declined precipitously from the same period in 2007, prices here still have not fallen as much as in many other major U.S. markets.

Year-over-year existing-home sales fell 25.5 percent in the eight counties, with Camden County (32.5 percent) and Delaware County (31.4 percent) leading the pack, according to Prudential Fox & Roach HomExpert Report, based on data from Trend Multiple Listing Service.

In the same period, second-quarter net new-homes sales in the seven suburban counties fell 44.9 percent from the 2007 period, according to Hanley Wood Market Intelligence, which tracks this and other markets.

The new-home figures "show us that buyers are not convinced that the bottom has occurred," said Wayne Norris, Hanley-Wood's regional sales director.

Since the period reflects the spring selling season, "these numbers are especially disappointing to the builders," Norris said.

Stricter lending standards are playing a part, because most builders have experienced many cases of willing buyers who have not been able to get the financing they could have in recent years, he said.

New-home base prices were down 6.9 percent, but the reason was that the volume of sales were much higher in the lower-price condo and townhouse market, Norris said.

Single-family prices were up 0.5 percent; condos 4.8 percent higher and townhouses down 4.9 percent.

"Entry-level sales are dragging down the median," Norris said.

In the city, the 27.3 percent drop in year-over-year existing-home sales made it the second-slowest quarter since spring 2001, according to Kevin Gillen, the Wharton research fellow, and half of their 2005 peak.

Existing-home prices regionwide were slightly lower year over year, just 0.4 percent, according to HomExpert.

The largest drops were in Delaware (8.7 percent) and Bucks (6.6 percent). Philadelphia prices, propelled by higher-price condo resales, rose 1.4 percent; Montgomery County prices were up 0.7 percent.

Hanley Wood only began tracking Philadelphia new-home sales in August 2007, and there is yet no year-to-year comparison available.

A separate study by the Web site Zillow.com found Philadelphia-area prices (including Wilmington) in the second quarter were 3.4 percent lower than the same period the year before, or $227,321.

Zillow's overall median price, however, was just $1,679, below number in the second-quarter 2008 HomExpert data -- $229,000 (excluding Wilmington).

This puts the median price, according to Zillow, at the point it was in the first quarter of 2007. The Web site said Philadelphia prices peaked in the second quarter of 2007, almost a year later than most other areas of the country.

What is even more revealing is Zillow's comparison of the region and other U.S. markets.

Philadelphia "is faring far better than the U.S. as a whole," said Stan Humphries, Zillow's vice president of data and analytics. By comparison, U.S. home values are down 9.9 percent year-over-year.

"In fact of the 165 markets we track, Philadelphia performed better than 117 of them," he said.

The area also has performed better in other measures. Almost one in four homes (23.7%) sold in the last 12 months have sold for a loss in the United States, compared with 7.1 percent in this area.

"Because home values aren't dropping as significantly, homeowners are holding onto more value, and less are slipping into negative equity situations," Humphries said.

In fact, of those who bought homes in the Philadelphia since 2003, only 13.2 percent are currently in negative equity situations, he said.

"While this may seem high, on a national level, almost one in three (29.1 percent) are in these situations," Humphries said.

In addition, over the long term -- five years -- the Philadelphia region's values have increased 7.5 percent for all homes, 6.6 percent for single-family houses alone and 13.6 percent for condos and co-ops, according to Zillow.

Suburban condos sales in the last 12 months are higher than single-family purchases, since condos tend to cost less and are thus more attractive to first-time buyers.

"It is clear that builders have adjusted to this market shift, as there are 30 percent more condo projects available [in the seven suburban counties] today compared with 2007," he said.

Prices did not rise here as much as they did in other major markets during the boom, so they haven't fallen as precipitously as Las Vegas, Florida and California.

In addition, while foreclosures and short sales are moving the market by slashing home prices in the West and South, the Philadelphia region is not yet experiencing either phenomenon, and most experts don't expect it to.

Regional sales, in fact were relatively steady until August 2007, long after other areas began to experience major problems.

"Last August was the subprime debacle," said Art Herling, regional vice president for Long & Foster Real Estate. "This August seems to be better. If rates were under 6 percent [fixed rates are about 6.6 percent] we'd be fine."

Despite the positive price news, Wharton's Gillen warns that the sales volume is usually a leading indicator of the direction prices will go, and the number of transactions continues to plummet.

"While I would agree we are unlikely to experience the freefall that cities in Florida or Nevada are in, both the data and fundamentals point toward some price correction in our future," he said.

Commerce Bancorp chief economist Joel L. Naroff also expects some further weakening in prices.

"The longer this goes on, the more homes that come on the market as people who have put off trying to sell because of the soft market finally decide to try their luck," Naroff said. "That would further depress prices."

Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

-----

To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com.

Copyright (c) 2008, The Philadelphia Inquirer

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:CBH,

Story Source: The Philadelphia Inquirer