Home values in the U.S. had their smallest decline in more than four years in the second quarter, as the share of borrowers with negative equity shrunk, Zillow Inc. said today.
In the second quarter, 26.8 percent of single-family homeowners with mortgages owed more than their houses were worth, compared with 28.4 percent in the previous three months, the Seattle-based company said. Values fell 0.4 percent from the first quarter, the smallest drop since the first three months of 2007, when values also slipped 0.4 percent, according to Zillow, which runs a website with property-value estimates and real estate listings.
While the Zillow Home Value Index fell 6.2 percent from year earlier, the rate of depreciation is slowing, said Stan Humphries, Zillow’s chief economist. A temporary decline in bank repossessions, caused by court delays and paperwork errors, may be preventing a more significant drag on house prices, he said.
“It’s a positive that we’re moving in the right direction,” Humphries said. “But I would caution us about being euphoric about these numbers.”
Foreclosure filings dropped in 84 percent of the largest U.S. cities in the first half of the year as attorneys general in all 50 states investigate allegations of shoddy practices by lenders and servicers, Irvine, California-based RealtyTrac Inc. said July 28.
“We do have a slower volume of foreclosures transitioning into the marketplace now,” Humphries said. “And that is helping the near-term performance of the market -- and at the expense of the longer-term performance.”
Values increased from the first quarter in almost two- thirds of the 154 metropolitan areas surveyed by Zillow, and 25 cities including Washington, D.C., and Pittsburgh had two consecutive quarters of increases.
Pittsburgh was the only market of the 25 largest that Zillow follows to show an increase in values from a year earlier, a 2.7 percent gain.
Among the top 25 markets, the Pennsylvania city had the smallest share of homeowners with mortgages who were “underwater” in the second quarter, 6.7 percent. Phoenix had the most borrowers with negative equity among the 25 cities, about 68 percent.
About 83 percent of borrowers were underwater in the Las Vegas area, more than any other region covered by Zillow.
Sales of previously owned homes declined 0.8 percent in June to a 4.77 million pace, the lowest in seven months, the National Association of Realtors said July 20. The S&P/Case- Shiller index of property values in 20 cities fell 4.5 percent in May from a year earlier, the biggest 12-month drop since November 2009.
To contact the reporter on this story: Prashant Gopal in New York at email@example.com
To contact the editor responsible for this story: Kara Wetzel at firstname.lastname@example.org