Home values are falling in a majority of American cities -- the first time that's happened since the mortgage crisis struck early last year.

The National Association of Realtors' latest report shows the median sales price in 77 of the 150 markets it tracks was lower during the final three months of 2007 than the last quarter of 2006.

That's a significant increase from the 51 markets that posted declines in the third quarter.

And where things are bad, they are very, very bad.

More than a dozen cities, including Los Angeles, Tampa and Sacramento, saw prices drop more than 10%.

The steepest declines are also concentrated in just five states -- California, Arizona, Nevada, Florida and Michigan.

Click here to check how the median sales price in your town has changed over the last year.

While most economists expect home prices will stabilize over the next couple of years, they don't expect the turnaround to come until late summer or early fall at the earliest.

The median price for all types of single-family homes sold across the country fell 1.4% last year to $218,900 -- the first annual decline since the Realtors began keeping records in 1968.

The group projects home prices will fall another 1.2% this year, while Bank of America economists say they'll decline 2.5%.

Moody's Economy.com Inc., a research firm in West Chester, Pa., predicts the median sales price will decline 13% between late 2007 and early 2009, with 80 cities experiencing drops of 10% or more.

Indeed, for the first time since the crisis began, home values are now falling in every section of the country. In the last three months of 2007 the median sales price fell:

• 3.2% in the Midwest to $156,300.
• 5.4% in the South to $171,700.
• 4.8% in the Northeast to $261,700.
• 8.7% in the West to $324,100.

The Realtors blamed soaring foreclosure rates -- primarily on costly subprime mortgages given to minority borrowers and consumers with bad credit -- for burdening the market with a large number vacant homes.

Lenders almost always sell those homes at a discount, dragging down prices for all sellers, most notably in Midwestern industrial towns and Sun Belt cities.

The group also said tighter lending standards prompted by the growing number of defaults and foreclosures on subprime loans kept some buyers from getting mortgages.

Borrowers with bad credit or those who needed especially large sums of money suffered the most. The average cost of a jumbo loan -- mortgages for more than $417,000 -- remained above 7% the entire last half of the year, depressing the sale of high-end housing.

While all of that is discouraging, it doesn't necessarily mean homes have become a bad investment. Even with the decline, homes have increased in value over the last six years.

Homeowners who bought in the fourth quarter of 2001 have still seen their homes increase 31.2% in value, adding $49,000 to their equity.

And what about the 73 cities where prices were still rising during the final three months of 2007? Eleven markets saw prices grow 10% or more.

Those are mostly small- to medium-sized markets such as Yakima, Wash.; Binghamton, N.Y., and the Cumberland area of Maryland and West Virginia. The latter showed the biggest home price increase (19%), which boosted the median sales price to $116,660.

Another positive surprise: Condo prices remained fairly steady in the fourth quarter, declining only slightly to a median price of $221,100 from $221,200 in late 2006.

Condo owners in Bismarck, N.D., scored one of the biggest price increases, 20.8%; prices in the New Orleans-Metairie-Kenner area of Louisiana rose 17.8%.

By Erin Brereton

Interest.com Contributing Editor

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