The Zillow Home Value Index out this week shows that the number of homeowners with underwater mortgages continues to climb, but notes that California home values are on the rise.

The Zillow report said that the percentage of single-family home mortgages with negative equity rose to 23.3 percent in the first quarter of 2010, from 21.4 percent in the fourth quarter of 2009.

From the Reuters coverage of the Zillow report:

U.S. home values in the first quarter were down 3.8 percent year-over-year and down 1 percent quarter-over-quarter, to $183,700, according to the Zillow Home Value Index. It was the 13th consecutive quarter of year-over-year declines.

“Several large California markets have shown significant stabilization in home values, marking what could be a bottom,” Stan Humphries, Zillow chief economist, said in an interview. “But, most markets across the country remained in decline.”

Home values declined year-over-year in 106 of the 135 metropolitan areas tracked by Zillow.

But home values in several large California metro areas — Los Angeles, San Diego, San Francisco, Santa Barbara and Ventura — have risen significantly for at least the past 10 months, up from lows reached in April or May 2009.

Humphries said the government’s recently expired homebuyer tax credits likely only shifted the timing of sales, rather than creating new demand.

Humphries said inventory levels were rising during the first quarter and home values continued to decline at a steady clip, even when the tax credits were still in place.

As a result, national home values are likely to reach bottom in the third quarter, and home value appreciation will likely then be near zero for some time, possibly as long as five years, he said.

The number of homeowners losing their homes to foreclosure across the country rose to a new peak in March, with more than one in every thousand homes, or 0.11 percent, being foreclosed, the highest since Zillow began recording national foreclosure data in 2000.

Foreclosure resales remained high in March, accounting for 22.2 percent of all U.S. home sales. Foreclosure resales made up the majority of sales in several metropolitan areas, including Merced, California, at 66.3 percent; Madera, California, at 63 percent; and the Modesto, California, at 61.7 percent, the reports showed.

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