The median sales price for South Florida single-family homes fell 16.9 percent from a year earlier in the third quarter, the Chicago-based National Association of Realtors said Tuesday.

Nationwide, prices were down 9 percent and sales of properties with mortgages in default accounted for at least a third of all transactions,

Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by distressed foreclosure sales across the country. Prices fell in 120 U.S. metropolitan areas, rose in 28 and were unchanged in four, the biggest share of declines in data going back to 1979.

In the Miami-Fort Lauderdale metro area, the median price for existing single-family homes sold in the third quarter was $287,800, down from $346,300 in the same period of 2007.

South Florida condo prices fell 14.6 percent to $159,000.

The financial turmoil sparked by the collapse of the U.S. subprime mortgage market has caused $996 billion of losses for banks, lenders and insurers. U.S. companies slashed 1.4 million jobs in the last six months, the biggest reduction since 1975.

Housing is front and center in the financial crisis, said Mark Zandi, chief economist at Moodys Economy.com in West Chester, Pa. So long as house prices are declining and foreclosures mounting, the financial system will struggle and the economy will be in recession.

The steepest price declines were all in California, the report said. The area surrounding San Bernardino had a 39 percent fall, Sacramento saw a 37 percent decline and San Diego was third with a 36 percent drop.

The root cause of the surge in home repossessions is the government's failure to deal effectively with unaffordable loans and unnecessary foreclosures, Federal Deposit Insurance Corp. Chairman Sheila Bair said in testimony Tuesday to the House Financial Services Committee in Washington.

Minimizing foreclosures is essential to the broader effort to stabilize global financial markets and the U.S. economy, Bair said.

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