U.S. home values remained almost unchanged from the second quarter to the third quarter, declining 0.2%, according to Zillow's third-quarter Real Estate Market Reports.
The Zillow Home Value Index fell 4.4% year-over-year to $171,500. Home values have fallen 28.8% since they peaked in June 2006.
A lower rate of foreclosure liquidations, coupled with relatively flat home values, caused negative equity to rise in the third quarter, with 28.6% of single-family homeowners with mortgages underwater, compared to 26.8% in the second quarter.
Regionally, home values have weakened in the majority of the metropolitan statistical areas (MSAs) covered by Zillow, with 105 out of 157 markets declining from the second to the third quarter. Comparatively, 66 out of 157 markets declined between the first and second quarters of this year.Â
‘The peak summer home buying season is over for the year, with fewer home sales to show for it than one would expect based solely on the underlying fundamentals of price and financing costs,’ says Stan Humphries, chief economist at Zillow. ‘Home affordability is at historic lows courtesy of a large reset in home prices and continued low mortgage rates. 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.’