Zillow’s May Real Estate Market Reports, released today, show national home values rose for the third month in a row, climbing 0.5 percent from April to May to a Zillow Home Value Index of $148,100.

The good news trend continues at the local level as well. In fact, of the 166 metros covered by Zillow, 86 show monthly home value appreciation. Among the top 30 metros, 23 experienced monthly home value appreciation. Leading the pack are once again Miami-Fort Lauderdale and Phoenix, which experienced 2.2 percent and 1.9 percent increases from April to May. On an annual basis, the Phoenix metro is approaching double digit increases, reporting a 9 percent rise in home values since May 2011.

It remains important to temper this good news with a reminder that the overhang of negative equity and tightening inventory could alter the long, flat bottom we originally anticipated. Home values continue to decline on an annual basis, falling 0.9 percent from May 2011 to May 2012, though this is the smallest year-over-year decline since October 2007.

Zillow chief economist Dr. Stan Humphries explains it further: “It is promising to see consecutive months of national home value increases, especially during a period in which we’d expected more downward pressure due to foreclosures. Attention has now shifted to the tug-of-war situation with inventory, where buyers want to buy but sellers don’t want to – or can’t – sell. This inventory phenomenon, due to both the broader issue of negative equity that is keeping people in their homes and to rational seller behavior at a market bottom, will make for a more volatile housing recovery than what we initially expected.”

For further analysis, visit the Zillow Research page.

About the Author

Lauren Riefflin manages news around Zillow Mobile communications and works closely with Zillow's real estate economists in preparing Zillow's real estate market reports. She also focuses on celebrity real estate news as both a Zillow Blog author and manager of celebrity content relationships.

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