About 28.6 percent of U.S. single-family homeowners’ mortgages are underwater as a result of a lower rate of foreclosure liquidations and relatively flat home values, compared to 26.8 percent in the second quarter, according to Zillow.com’s third-quarter market report. While the pace of foreclosures has slowed, liquidations remained high in September, with 8.7 of every 10,000 homes being liquidated.
But despite recent economic uncertainty, U.S. home values remained almost unchanged from the second quarter to the third quarter of 2011, declining by just 0.2 percent. Home values have fallen 28.8 percent since they peaked in June 2006, according to the Zillow Home Value Index, which fell 4.4 percent year-over-year to $171,500.
“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 Zillow’s chief economist Stan Humphries. “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.” — Katherine Clarke