Residential house prices in the USA have fallen for the seventeenth consecutive quarter, with values now 25% below their peak of June 2006, according to Zillow.

The fall in values is similar to that experienced during the Great Depression when property prices fell 25.9% in five years.

Stan Humphries, chief economist at Zillow, said: “While not unexpected, the unceasing declines in home values signal that we’re in for a long, bleak winter of continued troubles for the US housing market. The length and depth of the current housing recession is rivalling the Great Depression’s real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months.”

Values have decreased in 77% of markets in Q3 2010, although they have only fallen by 1.2% from Q2 and 4.2% annually.

The biggest fallers were Miami-Fort Lauderdale and Atlanta with decreases in the quarter of 4.2% and 5.3%, annual drops of 15.2% & 13.2% sending them 53.3% & 26% below peak price respectively.

Only three locations did not register a drop in price, with Pittsburgh seeing an increase of 2.6% for the quarter and 1.6% annually leaving it only 1.4% below peak. Boston saw an 0.1% increase for Q2 and 1.6% annually, making it 17.5% below peak. Riverside in California saw no increase in the quarter but rose 0.9% annually, but prices remain 52% below peak levels.

Humphries said: “The high percentage of homeowners in negative equity continues to be troubling, in that it represents a huge number of people who are not only more vulnerable to foreclosure, but who are essentially trapped in their current homes and are prevented from selling and buying a new home. This has profound implications for future demand and will be a millstone around the neck of the housing market.”
The number of single family homeowners with mortgages underwater on their mortgage in Q3 rose to 23.2%, the highest it has been since Zillow began tracking negative equity in 2009, it increased from 22.5% in Q2 2010.

Almost four out of five single family homeowners were underwater on their mortgages in the third quarter, with Las Vegas the leader as 80.2% are in negative equity, followed by Phoenix with 68.4%. In total, 11 markets tracked by Zillow had negative equity above 50%.