Home prices fall in February

The smallest decline was 0.6 percent in the South, which covers Kentucky, Tennessee, Mississippi and Alabama. The Great Plains had a monthly decline of 0.7 percent. 

Overall, prices paid for home purchases with the government-backed mortgage lenders are down 18.7 percent since the market hit its peak four years ago. Prices are about the same as in February 2004.

Foreclosures are expected to increase about 20 percent his year with home prices expected to bottom out sometime this spring, according to RealtyTrac, a firm that tracks the housing market. 

The first quarter saw a decline in the number of foreclosures that is expected to be a temporary blip while mortgage lenders pick up speed to repossess homes during an ongoing investigation into the documentation process. That will put more distressed homes on the market and likely continue to stifle price increases. 

Distressed properties, which include foreclosures or short sales, hit 40 percent in March up from 39 percent in February, the National Association of Realtors (NAR) reported on Wednesday. 

The median price for a previously owned home sold in February was $156,100, a nine-year low, according to NAR.