The median price dropped to $170,300 nationwide, the lowest price level in 6 years. The median home price in January declined by about 26 percent from its highest level of $230,000 in July 2006.



According to the realtor association's chief economist Lawrence Yun, cheap houses for sale made up almost 50 percent of home sales in January. These sales are usually foreclosure sales or distressed sales.

Another housing price tracking firm in the country posted that the prices of single-family homes had fallen by 18.5 percent in December 2008 compared to December 2007 prices. It has been the fastest decline on the firm's record and the firm expects further declines as home buyers wait for the lowest price that they can obtain.

However, according to housing market research firm DataQuick, sales closings for cheap houses for sale increased in January in parts of Southern California and the Bay Area. Home prices in the metropolitan areas of San Francisco and Los Angeles declined by about 40 percent compared to their highest levels.

Nationwide, the number of unsold houses including cheap houses for sale dropped to 3.6 million units from more than 4.5 million units in the summer of 2008. Homebuyers took advantage of attractive mortgage rates and the surplus of cheap houses for sale that arose from the continued foreclosure of delinquent mortgage borrowers.

Using the current sales rate, it would take about 10 months to wipe out the millions of excess units. As sales closings for cheap houses for sale increased in parts of the West, home sales in the Midwest and the South dropped by 5.7 percent and dropped by 14.7 percent in the Northeast.

Meanwhile, Federal Reserve Chairman Ben S. Bernanke testified before the U.S. House Financial Services Committee and told lawmakers that the millions of unsold houses could pull down home prices to levels that would further destabilize the housing market. He said bleak conditions in the mortgage and housing sectors have been dragging the national economy through their impacts on construction and financial industries.