Connecticut is leading the nation in declining home prices, one of just eight states to lose ground in the second quarter of this year, according to a new federal report.
And Fairfield County took a particularly strong hit, with prices down more than 8 percent from 2011, according to new numbers released by the Connecticut Association of Realtors.
While median prices for single-family homes rose nationally by 3 percent during the second quarter — compared with the same period in 2011 — in Connecticut they fell by 4.7 percent, according to the latest House Price Index prepared by the Federal Housing Finance Agency.
Condominium sales prices here dropped by 7.7 percent in the second quarter.
The quarterly index is developed using data from mortgage transactions overseen by the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association, commonly known as Freddie Mac and Fannie Mae, respectively.
The Connecticut Realtors released a report, prepared by Prudential Connecticut Realty, that showed Fairfield County took one of the biggest hits, with median prices for single-family homes down 8.2 percent in the second quarter, compared with 2011.
“The upper end of the market, referred to as the top 10 percent in price, has softened a great deal in the last year,” the Prudential report states. “Many towns in Connecticut saw fewer luxury sales by as much as 25 percent to 100 percent.”
The report adds that 80 percent of the sales in Greenwich have been below $3 million, which represents “a significant change in the market.”
“Clearly this is tied to the economy,” said Joseph McGee, vice president for public policy with the Business Council of Fairfield County. “Our employment numbers are still down and jobs and the economy drive the price of housing.”
A former state economic development commissioner, McGee praised Gov. Dannel P. Malloy for his “First Five” program and other initiatives that provide assistance to companies looking to relocate or expand in Connecticut.
McGee added that there is a silver lining to the latest housing price numbers, even though serious issues remain to be addressed. “I think some of the housing probably was overpriced and needed to settle back down,” he said, “so that is a good thing.”
Brian Durand, spokesman for Malloy’s chief budget and policy agency, the Office of Policy and Management, said Tuesday said given that Fairfield County has “some of the highest average home values in the country, it’s no surprise that taken as a percentage Connecticut can be subject to larger swings in any given quarter.”
“What matters most is that we’re taking real steps to improve the economy and our housing market over the long term,” Durand added. “Connecticut had the ninth fastest growing economy last year, adding more than 23,500 private sector jobs. New housing permits are up nearly 39 percent so far this year. And, this administration has added more than $275 million in support for state housing initiatives.”
New Haven County saw an 8.9 percent drop. But while the median home sales price there was $204,000 in the second quarter, the median price in Fairfield County was $490,000.
Five other counties also saw median prices drop for single-family home sales including: Litchfield, down 6.5 percent; Hartford, 3.6 percent; Tolland, 1.8 percent; Windham, 1.5 percent; and Middlesex, down 0.9 percent.
New London County recorded the only increase during the second-quarter, with single-family home sales prices up 2.4 percent over 2011.
Robert Kennedy, executive vice president of the Connecticut Association of Realtors, said a “wide disparity in housing prices” is just one of several factors affecting the state’s recovery.
“It is more important, however, to look at the big picture, and that is the fact that the housing market is a vital part of the overall economy that must be supported,” Kennedy added. “As we look towards the November elections, it is more important than ever that we consider the policies and platforms espoused by candidates and incumbents. Do they support increased taxes on home purchases that can stand in the way of home sales and purchases? And do they support reforms and regulation of the mortgage industry that would prevent another collapse of the housing market?”
“It’s easy to misconstrue numbers like these, so let’s put them in context,” Durand added. While some areas of the country saw small gains in the last quarter, the market in the Northeast did not.”
Several of Connecticut’s neighbors were among the eight states to experience declining prices during the second quarter. Massachusetts was down 1.1 percent, Rhode Island down 1 percent and New York and New Jersey both down 0.8 percent.
Other states recording declines were: Delaware, 3.4 percent; Oklahoma, 0.4 percent; and Pennsylvania, 0.3 percent.
The list of rising home sales prices was topped by Arizona at nearly 13 percent, followed by Idaho at 8.7 percent and Florida at 7.4 percent.