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Nothing terribly exciting happened to home prices in March, at least as measured by the size-adjusted median price. Detached home prices experienced a nice 1.4 percent bounce while attached homes fell .5 percent to a new post-boom low.

Since this data series peaked in September 2005, the size-adjusted median price has declined by 6.8 percent for single family homes and 9.7 percent for condos.

The “plain vanilla” median price fared a lot better, up on the month by 2.7 percent for single family homes and a whopping 4.2 percent for condos. However, the divergence with the size-adjusted median price suggests that the increase in the unadjusted median is due not to increasing pricing power but to a shift in purchasing patterns towards higher-end homes.

A move towards more high-end home purchases is probably best explained by the recent tightening of subprime lending standards, which would of course exert a greater negative impact on the low-priced end of the housing market. This is precisely the type of distortion that renders the plain vanilla median price such a flawed indicator of home pricing power.

This spring will likely turn out to be a battle between seasonal strength on one side and tighter lending standards and must-sell inventory on the other. It looks like round one went to seasonal strength. Let’s see what happens next month.

— RICH TOSCANO

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