The number of homeowners with debt greater than the value of their homes rose to 28.6 percent in the third quarter, according to real estate firm Zillow.
Zillow cited a lower rate of foreclosure liquidations and flat home values for the trend, which was up from 26.8 percent in the second quarter. The rate of foreclosures slowed, leaving more delinquent properties on the market.
Home prices were relatively flat, down 0.2 percent in the third quarter, but weakened in 105 of 157 housing markets covered by Zillow.
Some markets declined after recent periods of gain, including in Washington D.C. and Fort Myers, Fla. Detroit, Boston, Denver and Pittsburgh were the only large cities that reported increases.
The Zillow Home Value Index fell to $171,500, down 4.4 percent from 2010.
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, said Stan Humphries, Zillow's chief economist, in a statement. 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, said 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.