U.S. home values continued to fall in October, but at a rate that has stabilized as the market heads toward a bottom, according to a report from property valuation site Zillow.
Nationally, home values dipped 0.3 percent in October from September, and declined 5.1 percent from October 2010, to $147,900.
"The rate of monthly depreciation has stabilized around -0.2 percent to -0.3 percent over the last few months, an improvement compared to the fall of last year, when rates reached more than 0.8 percent monthly depreciation," the report said.
Home values have declined 23.7 percent from a May 2007 peak. Zillow said it expects home values to drop another 2 to 4 percent before reaching a bottom in 2012.
"Continued home-value depreciation is a reflection of an abundance of housing supply relative to continued anemic demand despite record high housing affordability and historically low mortgage rates. Low consumer confidence and fears of further price declines continue to contribute to a crisis of confidence among potential buyers," the report said.
"However, I’m encouraged by the positive, albeit slow, progress in working down the unemployment rate, which should help to improve consumers’ appetites for buying homes," added Stan Humphries, Zillow’s chief economist, in a statement.
Of the 156 metropolitan areas tracked by Zillow, 61 percent saw home values decline on a monthly basis; a quarter saw monthly increases; and 14 percent remained flat. Only 6 percent (10 metros) saw home values increase on an annual basis. Seven of those metros also experienced monthly appreciation: Fort Collins, Colo.; Honolulu; Madison, Wis.; Lincoln, Neb.; Oklahoma City; Fort Myers, Fla.; and Tulsa, Okla.
Of the 25 largest metro areas, all except Pittsburgh saw year-over-year decreases. Atlanta posted the biggest drop, down 14.7 percent, followed by Tampa, Fla., down 10.7 percent. Pittsburgh saw home values appreciate a slight 0.4 percent year over year.
Only four of the 25 largest metros saw monthly appreciation: Detroit; Phoenix; San Diego, Calif.; and Pittsburgh. Detroit posted the highest increase, up 1 percent. Of the remaining metros, St. Louis posted the largest monthly drop, falling 1.9 percent, followed by Atlanta, down 1.4 percent.
|Largest 25 metros
covered by Zillow
|Miami-Fort Lauderdale, Fla.||$136,800||-0.1%||-4.9%||-55.4%||—||—|
|Minneapolis-St. Paul, Minn.||$164,000||-0.6%||-9.1%||-31.5%||10.5||18.9%|
Homes were foreclosed on at a rate of 8.1 per 10,000 in October, a decline from an all-time high of 10.7 per 10,000 in October 2010, just before a controversy involving documentation irregularities caused a slowdown in foreclosure proceedings. The share of foreclosure resales in the market was 19.4 percent in October.
"We do expect an increase in the foreclosure liquidation rate either in conjunction with a settlement between major lenders and servicers and various states’ attorneys general or, alternatively, in the aftermath of the settlement effort falling apart.
This will cause the cumulative number of homes in foreclosure status to begin to fall again as these homes become REO (real estate owned), unfortunately putting renewed downward pressure on home values," the report said.
October’s report includes the addition of 18 million homes to the coverage area of Zillow’s Home Value Index, which previously covered 750 U.S. counties and now covers nearly 3,000.
Many of the homes added are in rural locations, which typically have lower home values, resulting in a lower national Zillow Home Value Index.
For example, September’s national index value fell to $148,400 from $171,500 after the data from the added counties was included. Zillow’s national home-value index is a weighted average of the median home value for each county.
Index values at the metro level were little changed because most homes within major metro areas had previously been covered, the report said.
Data from the added counties has been recomputed into the historical data back to 1996 for the Zillow Home Value Index, "so there is no discontinuity," the report said.