Report: One in Five Homeowners Now Underwater

More than one in five U.S. homeowners now "underwater" on their mortgages, owing more than the home is worth, according to a new report documenting the continued slide in U.S. home values.

U.S. home values in the first quarter of 2009 were down 14.2 percent compared to one year before, according to real estate data service Zillow.com, making it the ninth consecutive quarter of declines. At the same time, foreclosures rose to account for nearly one-quarter of all residential real estate sales during the quarter.

"A combination of falling prices and low down payments has left many borrowers underwater," said Stan Humphries, Zillow's vice president in charge of data and analytics. "In some markets, more than half of all homes are in negative equity."

The Zillow Home Value Index estimated the median price of a U.S. single-family home at $182,378, down 21.8 percent since the market peak.

Foreclosure sales have been rising steadily since the second quarter of 2006, according to the survey, when they made up only 3.6 percent of all home sales. Over the past 12 months, foreclosures and short sales combined have made up nearly one-third of all U.S. home sales.

Among the few bright spots in the report are that some of the hardest-hit real estate markets, such as some in a California, are beginning to show slower rates of decline, and 17 of the 161 metropolitan areas surveyed have showed at least small improvements over the past two quarters.

"Slowing declines in select markets are a bright spot or, at least, what passes for one given current market conditions," said Humphries. "Unfortunately, given the magnitude of the current rates of decline, we're still many months away from a bottom even as depreciation slows."

The Zillow Real Estate Market reports are aggregated from public sources for 161 U.S. metropolitan areas dating back to 1996. The Home Value Index is is calculated using a weighted average of the median home value for each county.