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Zillow: Home Values Rise in Q3, Recovery Uneven Across Markets

National home values in the third quarter experienced their biggest increase in more than half a decade, according to ""Zillow"":http://www.zillow.com/.

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Home values in the United States rose 1.3 percent from the second to the third quarter, marking the fourth straight quarter of increases, Zillow reported. The quarterly rise is the biggest increase since March 2006, when home values rose 1.5 percent.

In addition, the Zillow Home Value Index (ZHVI) rose year-over-year, increasing 3.2 percent to $153,800, according to Zillow's third-quarter Real Estate Market Reports. The last time national prices were at a comparable level was in January 2011.

Zillow's Home Value Forecast predicts more growth, albeit at a slower pace. National values are projected to increase 1.7 percent by the third quarter of 2013. Of the 253 markets covered by the forecast, 183 are believed to have hit bottom, giving them nowhere to go but up. An additional 41 markets are expected to hit a bottom in the next year.

The recovery pace has been uneven across markets, however. As the summer buying season ended, many metro areas reported decreasing quarterly values.

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For example, while Phoenix reported a banner quarter├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øseeing values rise 5.9 percent quarter-to-quarter and 20.4 percent year over year├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øthe Atlanta metro didn't fare as well, with values declining 2.2 percent from Q2 and 4.8 percent year-over-year.

""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,"" said Zillow chief economist Dr. Stan Humphries. ""While that doesn't mean the recovery has come off the rails├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øin fact, most markets have hit bottom├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øit does present a confusing environment for customers. Looking forward, we expect to see home values bump along the bottom for some time, before increasing at a slow and steady pace.""

Zillow reported that overall, more metro areas experienced home value declines in the third quarter than in the second, with 52 percent showing declines (compared to 34 percent in Q2). Based on this data, Zillow forecasts a ""saw-toothed bottom to the housing market, in which home values will log smile rises and falls before returning to consistent monthly home value appreciation closer to the long-term historical average.""

On a state level, 17 of the 41 states covered by Zillow showed home value declines from the last quarter. Their ranks include New Hampshire, North Carolina, Ohio, Virginia, and Wisconsin├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øall battleground states the upcoming presidential election.

""The positive news on a national level is dominating headlines, and perhaps that is why we haven't heard either presidential candidate talk in-depth about housing,"" Humphries said.

""However, despite the national recovery, we are still seeing significant polarization among markets, and more than half of battleground states are still experiencing home value declines. This demonstrates that for many pivotal voters who will decide the upcoming election, housing is still a key issue, and one that should be addressed by the candidates.""

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