The residential property market in the United States has seen quarterly home values increase by its largest amount since 2006, but the recovery is sporadic.
The latest Zillow Real Estate Market report shows that nationally home values rose 1.3% from the second to the third quarter of 2012, the biggest quarterly gain since March 2006, when home values rose 1.5% and the fourth consecutive quarter of increases.
The real estate firm is now forecasting that home values are set to increase by 1.7% by the third quarter of 2013 and that 183 of the 253 markets covered by the forecast have hit a bottom with another 41 markets expected to hit a bottom in the next year.
However, the pace of the recovery is uneven across markets, as more metro areas showed decreasing quarterly values in the third quarter than in the second quarter as the home buying season came to an end.
Additionally, two in five of the states covered by the Zillow Real Estate Market Reports showed decreasing values in the third quarter including New Hampshire, North Carolina, Ohio, Virginia and Wisconsin.
Some of the better performing markets include the Phoenix metro area where home values rose 5.9% quarter on quarter and increased 20.4% year on year. But in the Atlanta metro, home values fell 2.2% quarter on quarter and 4.8% year on year.
Overall, more metro areas experienced home value declines in the third quarter and 52% were showing declines in the third quarter, compared with 34% in the second quarter.
Zillow forecasts a saw toothed bottom to the housing market, in which home values will log small rises and falls before returning to consistent monthly home value appreciation closer to the long term historical average.
‘We’re likely seeing home values fall back into the negative range in some markets due to the close of the traditional home buying season. While that doesn’t mean the recovery has come off the rails as in fact most markets have hit bottom, it does present a confusing environment for consumers,’ said Zillow chief economist Stan Humphries.
‘Looking forward, we expect to see home values bump along the bottom for some time, before increasing at a slow and steady pace,’ he added.
Meanwhile the latest monthly report from the National Association of Realtors shows that the national median home price recorded its seventh back to back monthly increase from a year earlier.
The national median existing home price for all housing types was $183,900 in September, up 11.3% from a year ago. The last time there were seven consecutive monthly year on year increases was from November 2005 to May 2006.
Distressed homes, that is foreclosures and short sales sold at deep discounts, accounted for 24% of September sales of which 13% were foreclosures and 11% were short sales. This was up from 22% in August but down from the 30% recorded in September 2011.
Foreclosures sold for an average discount of 21% below market value in August, while short sales were discounted 13%.
‘Despite occasional month to month setbacks, we’re experiencing a genuine recovery. More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West,’ said Lawrence Yun, NAR chief economist.