Median home prices fell in 111 of 150 metro areas in the third quarter, according to the National Association of Realtors (NAR).

Only 39 of the 150 areas had median price gains in the third quarter, down from 41 in the second quarter.

Homes sales, including single-family properties and condos, were down 0.1 percent in a seasonally adjusted annual rate of 4.880 million, from 4.883 million in the second quarter. Sales increased 17 percent from 4.170 million in the third quarter of 2010, with gains in 45 states and the District and Columbia compared to last year.

The national median home price was $169,500, down 4.7 percent from $177,800. Distressed homes sold with around a 20 percent discount and accounted for 30 percent of third quarter sales. Distressed sales made up 33 percent of second quarter sales and 34 percent of sales in the third quarter of 2010. 

Home sales need to recover first - only then can prices stabilize. Existing-home sales are little changed from the second quarter but are notably higher than a year ago, said Lawrence Yun, NAR's chief economist. The good news is inventory levels have been trending gradually down.

All-cash home purchases, in which no mortgage is taken, made up 29 percent of third quarter purchases, around the same as 30 percent in the second quarter and 29 percent in the third quarter of 2010. Investors make up the bulk of all-cash buys, accounting for around 69 percent of them in the third quarter.

First-time homebuyers bought 32 percent of all homes, down from 35 percent in the second quarter and 34 percent in the third quarter of 2010. Historically, first-time buyers account for 40 percent of the market.

Condo and co-op prices, calculated from 54 metro areas, had a median of $167,600, down 2.2 percent from last year. Twelve areas had increases in price, while 42 areas had declines.

Housing affordability conditions have been at a record high this year, rents are rising and homes are selling for less than the cost of construction in most of the country, said Ron Phipps, president of the NAR and a broker and president of Phipps Realty, in a statement.

For people with secure jobs, good credit and long-term plans, today's conditions will be remembered as a golden opportunity to enter the housing market.