Home prices fell in nearly nine out of every 10 U.S. cities during the first three months of this year. The steep drop in home prices dropped at a record pace of 13.8 percent to $169,000 year over year, the largest year over year decline while 6.2 percent decline was observed compared with the fourth quarter of 2008 home prices, according to the National Association of Realtors.

NAR said Tuesday in a report that median sales prices of existing homes declined in 134 out of 152 metropolitan areas compared with the same period a year ago while prices rose in the other 18 cities.

Sales of foreclosures and other distressed properties made up about half of the market.

The decline, as NAR reported, is a result of first-time homebuyers dominating the market and that many buyers took advantage of the deeply discounted prices of foreclosed properties and short sales.

Distressed properties normally sell for 20 percent less than traditional homes, according to NAR. This type of sale made up about half of all transactions.

"Traditional homes in good condition have held their value much better, so owners shouldn't be overly concerned about median prices," said NAR president Charles McMillan, in a prepared statement.

Sales volume drop in all but six states namely Nevada(116.8 percent), California(80.6 percent), Arizona( 50.2 percent),  Florida(25 percent), Virginia 12.2 percent) and Minnesota(11.9 percent) — where buyers have been able to snap up foreclosures at a deep discount.

Sales volume increased substantially in only a few states. Sales were doubled in Nevada (116.8%) and are way up in California (80.6%), Arizona (50.2%) and Florida (25%), as well as Virginia (12.2%) and Minnesota (11.9%). This signals that the worst may e over in the said distressed states.

Lawrence Yun, the trade group’s chief economist, said the $8,000 tax credit for first-time buyers included in the economic stimulus package signed by President Barack Obama earlier this year should boost sales.

“We expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas,” Yun said in a statement.

Of the 18 reported cities with year over year price gains, prices in Cumberland, Md., increased 21.1 percent to $114,900, the biggest of any market. This was followed by Davenport, Iowa, and Columbia, Mo. where the median price jumped 13.8 percent to $100,300 and 6 percent to $152,600, respectively.

Cape Coral, Fla., posted the biggest year-over-year price drop by 59.1 percent to $87,300. In Saginaw, Mich., the median home prices dropped 53.7% to $30,300, making it the lowest-priced market covered by NAR.