Median home prices fell a record 15.6% during the three months ended June 30, compared to the same period in 2008, according to an industry report.

There is good news though: The survey from the National Association of Realtors reported the median home price rose 4% compared to the first quarter of 2009 — to $174,100 from $167,300.

The increase in median price was not a surprise, representing, as it did, the traditionally strong spring selling season. But the jump did offer the prospect that the worst of the price declines may be behind us.

“With low interest rates, lower home prices and a first-time buyer tax credit, we’ve been seeing healthy increases in home sales, which are a hopeful sign for the economy,” said Lawrence Yun, NAR’s chief economist..

In the vast majority of metro areas — 129 out of 155 — median prices dropped year-over-year. Some of the decline can be traced to an increase in the percentage of foreclosures and short sales. They accounted for 36% of all transactions during the quarter.

These “distressed properties” are usually sold at discounts of at least 15% compared with traditional sales.

Patrick Newport, a real estate analyst for IHS Global Insight, while admitting the year-over-year results are still awful, said recent evidence indicates that prices are stabilizing.

“The state sales data show sales picking up across the country,” he said.

Newport expects prices and sales to trend down again, especially when the impact of the first-time homebuyers tax credit starts to fade. The credit ends December 1. “Afterward, sales will take a hit,” he said.

His forecast is for prices to drop another 5% this year, driven down by added inventory as the foreclosure plague continues to worsen.

Cheapest and priciest areas
The Cape Coral metro area in Florida recorded the largest decline: 52.8% to $84,000. Davenport, Iowa, had the biggest gain: 30.6% to $113,200.

The lowest priced market in the nation is now Saginaw, Mich., where the median home sold for $55,700 during the quarter, a 30.6% drop over last year. The most expensive market was Honolulu, with a median price of $569,500 — although that’s still a 10.5% discount from a year ago. San Jose, Calif. led all mainland cities at $500,000 but that was still down a whopping 33.8% from a year ago.

Condo market
Condo prices have taken an even more severe beating. They fell 19.8% year-over-year, but rose 3.6% quarter-over-quarter.

If you’re in the market for a condo in Las Vegas, you may never find a better time. Prices dropped 54.1% compared with the second quarter of 2008 and fell 11.7% between the first and second quarters of 2009. The median price now stands at a bargain basement $66,400.

Condo prices rose year-over-year in only four of 61 metro areas surveyed by NAR. The biggest gain was in Virginia Beach, where prices went up 2.8%. Wichita, Kan. (2%), Dallas (0.7%) and Colorado Springs (0.2%) were the only other gainers.

The most expensive condo market was San Francisco, where the median price was $405,700, down 22.5% from a year ago. Las Vegas was the cheapest condo market by far, with Reno a distant second at $103,100.

(Source: CNN Money)