U.S. home prices fell 2.6 percent from the third quarter of 2010 to the fourth, the biggest drop in nearly two years, according to a report by property portal Zillow.
The Zillow Home Value Index, which is not seasonally adjusted, fell 5.9 percent on a year-over-year basis, to $175,200 — 27 percent below a June 2006 peak.
The accelerated decline in home prices after the expiration of the federal homebuyer tax credits in mid-2010 forced a record percentage of those selling homes in December — 34.1 percent — to sell at a loss.
Zillow estimated that 27 percent of homeowners with mortgages were underwater, owing more than their house was worth, up from 23.2 percent in the previous quarter.
The good news is that the declines “mean we’re getting closer to the bottom,” said Zillow Chief Economist Stan Humphries in a statement.
“The housing recession is likely in its death throes, and we expect to see sales pick up in early 2011,” Humphries said. “That will lead the way to home values stabilizing and an eventual bottom later this year, although it will take several months of increased sales activity before values begin to respond.”
A home-price index released Tuesday by mortgage data aggregator CoreLogic showed U.S. home prices falling for the fifth month in a row in December, although the rate of depreciation is slowing, the company said.