According to the National Association of Realtors, homes are increasing in price, despite an economic slowdown. Fueled by low interest rates and relatively low unemployment, home sales are still selling at a near-record pace, prompting Federal Reserve Chairman Alan Greenspan to attribute housing to stabilizing the downturn of other economic factors. But there's also early warnings of a possible housing recession.

In its most recent housing report, the NAR said that more metros than not are reporting higher prices. Dr. David Lereah, NAR's chief economist, says, "There were 79 areas with price increases greater than 4.5 percent -- that means home prices in most of the country are rising more that 2.0 percentage points above the general rate of inflation, which was 2.5 percent during the second quarter," he says. "Historically, median home prices rise one-to-two percentage points above the overall rate of inflation, so these increases offer some very healthy gains for home sellers."

The NAR said that the national median existing-home price was $146,900 during the second quarter, up 6.4% from the second quarter of 2000 when the median price was $138,000.

NAR President Richard A. Mendenhall said, "Clearly, the demand from near-record home sales is a major factor in higher home prices, but in most areas prices are not running away from people's ability or desire to buy. Going forward, our biggest concern is affordability for first-time buyers, who are key to the continued health of the housing market and its contribution to the overall economy."

That may not be a problem, because some markets including California and North Texas, are already reporting a peak in double-digit increases in existing, single-family home prices, that could eventually trickle down to first-time homebuyers.

In its second quarter report, The California Association of Realtors found that home prices are indeed higher, but demand is beginning to soften. While reporting the median price of a single-family home as the highest on record at $258,110, CAR said that the median price has increased 7.5 percent from the same period a year ago when it was $240,100.

Some areas such as The Central Valley, High Desert, Northern California, Northern Wine Country, Palm Springs/Lower Desert, Riverside/San Bernardino, Sacramento, San Diego, and Santa Barbara regions, still posted double-digit increases, but meanwhile closed escrow sales amounted to 509,180 for the second quarter of 2001 at a seasonally adjusted annualized rate, a 6.6 percent decrease from 545,340 in the second quarter of 2000.

CAR's Unsold Inventory Index for existing, single-family detached homes for the second quarter of 2001 rose to 3.6 months, compared to 3.0 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

After years of double-digit growth, the North Texas Real Estate Information System (NTREIS) and Texas A&M University Real Estate Center report that through the first half of the year, median home resale prices were up only about 6 percent from the first six months of 2000.

Inventories, along with prices, are also up. According to NTREIS,

After years of double-digit growth, the North Texas Real Estate Information System (NTREIS) and Texas A&M University Real Estate Center report that through the first half of the year, median home resale prices in the Dallas/Fort Worth metroplex were up only about 6 percent from the first six months of 2000.

But inventories, along with prices, are also up. According to a recent Dallas Morning News article, home inventories have risen more than 25 percent. Agents interviewed in the article also reported more reduced prices and difficulty working with sellers who haven't adjusted to the fact that the market has changed.

"I'm telling them we are not in last summer's market," said Dallas agent Jennie Ling with Virginia Cook Realtors. "The market changed at the end of last year. "We are seeing the prices on a lot more properties reduced," she said.

Other agents are reporting seller denial. Agent Joye Kuhn of Re/Max DFW Associates said, ""Some sellers do not understand that people don't want to negotiate on a house that is overpriced," she said. "Many of them will just not make an offer.

"We understand that as the seller you want to make the most amount of money with the least amount of effort," Ms. Kuhn said. "But we tell them to look at things from the buyer's perspective."

St. Louis agent Sam Valenti says he has lived through three market recessions and they all begin and end the same way - with seller denial.

"Often sellers are in denial for the first year of a recession. It is very difficult to get them to understand that housing is elastic and that when demand drops, prices drop," says Valenti. "Agents are somewhat clueless as well. They have no comps that accurately reflect the market and they list homes too high. The homes do not sell and get added to the agent expense column at a time when revenues are down as well.

"Finding the market and developing strategies to market position and price position a home becomes very difficult," continues Valenti. "Price, terms, and condition become more important now than in boom times."

Meanwhile, the NAR reports that demand for housing remains strong in the second quarter, with 37 states posting increases from a year ago. Nationwide, the seasonally adjusted annual rate of existing single-family, apartment condominium and co-operative home sales totaled 6.06 million units in the second quarter of this year, up 3.2 percent from the 5.87 million-unit pace in the second quarter of 2000. This was the second highest annual rate since NAR started tracking the total state resale series in 1981; it was just shy of the record pace of 6.07 million units in the first quarter of this year, said the trade organization.

Total sales rose by double-digit rates in 12 states in the second quarter, compared to the same quarter in 2000. Eleven states and the District of Columbia reported a decline in the resale rate, while two states, Illinois and Minnesota, saw no change in comparison with a year ago.