Rhode Island’s single-family house prices fell to their lowest level in five years during July, August and September, as banks and distressed borrowers sold off properties at steep discounts, according to a report scheduled to be released today by the Rhode Island Association of Realtors.

The median price of a single-family house declined about 18 percent, to $230,000, from $280,000 a year earlier, the Realtors reported. House prices have fallen nearly 20 percent in the last three years — double the rate of decline during the 1990s real-estate bust.

Economists released revised forecasts last week that show house prices in the state are expected to decline through 2010, though at a slower pace.

A forecast released last week by HIS Global Insight projected that median home values in Rhode Island would decline a further 7 percent, or $16,000, by next year. Global Insight’s predicts that prices will not begin to rise again until 2011.

Moody’s Economy.com forecasts that house prices will hit bottom in mid-2010, with the median price just over $220,000, and then begin to rise. By that measure, prices will have fallen more than 22 percent off their 2005 peak of $290,000.

During the real-estate bust in the early 1990s, house prices fell 10 percent over three years. Prices did not begin to rise again until 1996.

More than one in four single-family houses sold during the third-quarter of this year — 27.4 percent — were foreclosures or “short sales” in which the house was sold for less than the amount owed on the mortgage, according to the Realtors.

Those distressed sales drove down the median prices. Excluding foreclosures and short sales, the Realtors reported, the statewide median price of houses sold during the third quarter was $268,500.

More than half of all the distressed sales, the Realtors said, were in Pawtucket, Providence, Cranston and Warwick. All five of those communities reported double-digit price declines.

Real-estate agents whose clients during the boom years were homeowners looking to trade up to bigger and more expensive houses are now searching for deals for investors looking to take advantage of the price declines.

“A lot of investors are out there purchasing these distressed properties, fixing them up … and then flipping them,” said Arthur Samos, a real estate agent at ReMax Central in Coventry. Many of them already have buyers “in their pockets,” he said.

Kim Correia, an agent with BenMar Realty, in North Smithfield, said her clients now include closing attorneys who are savvy enough to know what the properties are worth. Often, she said, these investors purchase the properties through limited liability corporations and prefer to keep a low profile.

Correira said she has sold foreclosed properties in Woonsocket, North Providence and Johnston. “You get really good foreclosures at really good prices,” she said, “and the vandalism isn’t that high in those towns.”

In Woonsocket, the median price of a single-family house during the third quarter fell 20.8 percent, to $176,000, compared with $222,250 a year earlier, according to the Realtors. The pace of sales statewide during the third quarter continued to remain slower than last year, though the decline was not nearly as dramatic. Sales during July, August and September were down 8.1 percent from the same period last year, the Realtors reported. (That’s compared with a 17 percent decline during the second quarter compared with a year earlier.) During the month of September, sales rose 6.4 percent from the same month last year.

“Rhode Island is on the cusp of a turnaround,” the National Association of Realtors’ chief economist, Lawrence Yun, said in a statement released by the Rhode Island Realtors. “The buyers are returning … to take advantage of much lower prices.”

At the current pace of sales, it would take 10 months to sell all the 6,632 single-family houses listed with real-estate agents during the third quarter, according to a Providence Journal analysis of the Realtors’ data. The market is generally considered balanced when the supply is about six months.

During the third quarter, the Realtors reported, the median single-family house price increased in six communities: Barrington, Warren, Providence’s East Side, Exeter, Charlestown and Narragansett.

“It’s not as fast and furious as it was but we’ve definitely seen more activity in the last couple of months. So maybe the tide is turning,” Cecile Cohen, an agent with Randall Realtors in Charlestown. “Just in the last three weeks we are selling some vacation homes. We’ve got our share of short sales and a few foreclosures.”

The type of buyers in the market has also changed as credit tightening has meant buyers “need to be more qualified” to get a mortgage, said Samos, the ReMax agent in Coventry.

“We were way out of whack allowing people to spend up to 50 percent of their earnings” on mortgage payments, Samos said. “We’re back to the old standards” of 35 percent. Mortgage relief

•With more than 4 million American homeowners, or 9 percent of borrowers with a mortgage, either at least one month behind on their payments or in foreclosure, the federal government and the mortgage industry yesterday announced the most sweeping effort yet to speed up the process for renegotiating hundreds of thousands of delinquent loans held by mortgage giants Fannie Mae and Freddie Mac.

 Under the plan, some of those who qualify could see their interest rates reduced so their monthly payments would not exceed 38 percent of their income. Others might have the length of their loans extended from 30 to 40 years, thereby reducing their monthly payments.

 Government officials had no estimate of how many homeowners would be able to qualify for the program.

 The move follows similar steps taken by several major banks, including Citigroup, JPMorgan Chase & Company and Bank of America, to work with hard-pressed homeowners to slow the skyrocketing rate of foreclosures.

 But some say the government needs to do more, with Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, saying the plan “falls short of what is needed to achieve wide-scale modifications of distressed mortgages.” Details, D1

larditi@projo.com