Real estate prices close out 2010 in tailspin

Zillow data: rise in cash buyers

U.S. home prices fell 2.6 percent from the third quarter of 2010 to the fourth, the biggest drop in nearly two years, according to a report by property portal Zillow.

The Zillow Home Value Index, which is not seasonally adjusted, fell 5.9 percent on a year-over-year basis, to $175,200 — 27 percent below a June 2006 peak.

The accelerated decline in home prices after the expiration of the federal homebuyer tax credits in mid-2010 forced a record percentage of those selling homes in December — 34.1 percent — to sell at a loss.

Zillow estimated that 27 percent of homeowners with mortgages were underwater, owing more than their house was worth, up from 23.2 percent in the previous quarter.