U.S. home values were virtually flat in the third quarter compared to the second quarter, though they fell on a year-over-year basis, according to the latest quarterly report from property valuation site Zillow.

Nationally, home values dipped 0.2 percent in the third quarter from the previous quarter, and declined 4.4 percent from third-quarter 2010, to $171,500. That represents a 28.8 percent decline from a June 2006 peak.

"While we still have a ways to go in terms of home-value depreciation, the pace at which home values are falling has declined considerably during the course of this year. This slower pace signals that a stabilization is on the horizon," the report said.


Zillow said it expects home values to decline another 3 to 5 percent before reaching a definitive bottom, possibly in 2012.

"We’re clearly dealing with a crisis of confidence that is keeping potential buyers on the sidelines, fueled largely by high unemployment and more general economic uncertainty," said Stan Humphries, Zillow’s chief economist, in a statement.

"That said, given the steady drumbeat of recent negative economic news, home values held up better than would be expected. We have been forecasting a housing bottom in 2012, at the earliest, and third-quarter data further confirms this forecast."

Of the 157 metropolitan areas tracked by Zillow, 67 percent saw home values decline on a quarterly basis and 86 percent saw values decline on an annual basis.

Of the 25 largest metro areas, all except Pittsburgh saw year-over-year decreases. Sacramento, Calif., posted the biggest drop, down 11.2 percent, followed by Atlanta, down 10.5 percent. Pittsburgh saw home values appreciate by 3.2 percent year over year.

Pittsburgh was also the only metro among the 25 to post a quarterly increase above 1 percent (1.2 percent). Pittsburgh had the smallest negative equity rate among the 25, at 7.1 percent. Its home values have remained essentially flat since that market’s peak, down 0.7 percent.

Largest 25 Metropolitan Statistical Areas Covered by Zillow Zillow Home Value Index  
Q3 QoQ Change YoY Change Change From Peak Negative Equity*
United States $171,500 -0.2% -4.4% -28.8% 28.6%
New York $348,400 -0.1% -3.0% -23.8% 17.5%
Los Angeles $387,000 -0.7% -5.9% -36.0% 20.8%
Chicago $169,900 -1.1% -9.0% -37.4% 46.2%
Dallas-Ft. Worth, Texas $126,100 -1.0% -3.3% -12.6% n/a
Philadelphia $192,300 -0.4% -4.1% -18.5% 19.4%
Miami-Fort Lauderdale, Fla. $138,200 -1.1% -3.5% -55.1% 46.7%
Washington, D.C. $313,400 -0.3% -1.4% -28.6% 26.7%
Atlanta $118,900 -3.0% -10.5% -34.8% 58.7%
Detroit $74,700 0.9% -5.1% -53.0% 33.1%
Boston $319,100 0.5% -1.3% -19.9% 14.3%
San Francisco $467,400 -1.7% -7.5% -33.8% 24.7%
Phoenix $122,400 -1.1% -7.6% -56.6% 66.2%
Riverside, Calif. $182,700 -1.5% -5.0% -54.6% 51.4%
Seattle $257,000 -1.5% -5.7% -32.7% 36.1%
Minneapolis-St. Paul, Minn. $158,700 -1.0% -9.8% -35.7% n/a
San Diego, Calif. $344,000 -1.4% -5.8% -35.9% 25.8%
St. Louis $130,500 -1.1% -6.3% -17.1% 29.7%
Tampa, Fla. $105,000 -2.5% -9.2% -51.6% 56.5%
Baltimore $221,200 -0.6% -4.1% -26.5% 28.8%
Denver $197,300 0.3% -3.5% -15.0% 38.5%
Pittsburgh $110,700 1.2% 3.2% -0.7% 7.1%
Portland, Ore. $209,000 -0.2% -4.3% -28.7% 32.3%
Cleveland $111,200 -0.2% -4.8% -22.8% 41.5%
Sacramento, Calif. $200,000 -1.9% -11.2% -51.8% 50.9%
Orlando, Fla. $115,500 -1.9% -5.8% -55.3% n/a

*Negative equity refers to the percent of single-family homes with mortgages where the borrower owes more than the home is worth.

Source: Zillow.

Homes were foreclosed on at a rate of 8.7 per 10,000 in September, a decline from 10.7 per 10,000 in September 2010. The share of foreclosure resales in the market has risen to 18.9 percent from 15.1 percent in third-quarter 2010.

The share of homes with negative equity inched up to 28.6 percent, compared with 26.8 percent in the second quarter.

A report by property data firm CoreLogic, released Monday, found national home prices fell both on both a monthly and annual basis in September.

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