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Existing home sales in the 12-state region fall to 18 percent from February last year as doubts about the economic conditions and firm credit requirements prevent potential buyers, according to two reports released on Monday.
The median price in the Midwest declined 8 percent to $131,000 which is the second-smallest drop of any region.
By contrast, nationwide home sales slipped 10 percent from a year ago, without adjusting for seasonal factors, while prices tumbled almost 16 percent to $165,400.
Home sales fell in 11 of 12 major Midwestern cities with seven of those plummeting by more than 20 percent from prior-year levels the survey includes all home sales recorded in the metropolitan statistical area by all local agents, regardless of company affiliation.
Chicago; Wichita, Kan.; Indianapolis; Des Moines, Iowa; and Kansas City, Mo., face the biggest losses in the region, dropping by 25 percent or more.
Overall sales increased 5 percent in February while the median sale price fell 50 percent which is considered to be the biggest drop in the country to $41,000.
Home sales in Chicago plummeted by 65 percent in February from a year ago, one of the worst showings in the nation. The median home sale price has also fallen, declining 23 percent to $179,000.
A real estate agent said that buyers who would normally have taken advantage of lower home prices are now staying out of the market, afraid that prices will continue to fall. He said the problem has only worsened as more homes are taken into possession or are being sold short that is for less than the balance on the mortgage.
Those stressed sales make it virtually impossible for regular sellers to put their properties on the market for good prices, even in higher-valued neighborhoods, he said.
Every part of state has been affected. Properties that were sold for $410,000 a year ago now go for $120,000.
Sales in the Indianapolis market slid to 29 percent in February while the median sale price fell 15 percent to $93,900.
One of the reasons is that lenders have increased their requirements for mortgages, forcing potential buyers to provide more documentation on income and other financial factors.
Home sales in Fargo slid to 25 percent in February compared with a year ago, but the median sale price has remained relatively controlled,declining only about 2 percent to $139,900.
One of the agents said the economic troubles affecting much of the country have scared away some potential buyers.
Another agent said the market for first-time home buyers has been a bright spot, especially after the federal government began offering an $8,000 tax credit to first-time buyers as part of the new economic encouragement plan.
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