Zillow Chief Economist: Negative Equity to Cast Shadow Over Housing Market

National home values rose for the second month in a row, climbing 0.7 percent from March to a Zillow Home Value Index of $147,300. This is the largest monthly increase in home values since January of 2006, when they rose 0.8 percent, according to the April Zillow Real Estate Market Reports. Rents also rose from March to April, increasing 1.6 percent, according to the Zillow Rent Index. Rents rose in 78 percent of the 178 markets covered by Zillow. Home values rose significantly in the Miami-Fort Lauderdale and Phoenix metro areas, rising 1.6 and 1.9 percent, respectively. However, values continued to fall in hard-hit markets such as Atlanta, where home values declined 0.7 percent. "The housing market continues to show positive signs, with home values increasing significantly in April," said Zillow Chief Economist Dr. Stan Humphries. "The recovery is moving in the right direction, but we caution that negative equity will cast a long shadow over the housing market. With almost one-third of homeowners with mortgages underwater and unable to sell their homes, inventory is having a hard time keeping up with increasing demand in many areas. We'll continue to watch this signal as increasing home values turn from a blip into a trend." Foreclosures continued to decline in April, with 6.8 out of every 10,000 homes in the country being foreclosed. That was down from eight out of every 10,000 in March.