Homeowners in the United States were more optimistic about the future of the housing market last quarter than they have been in 18 months, according to the Zillow Q3 Homeowner Confidence Survey.

According to the Seattle-based company’s study, 41 percent believe their home’s value will increase in the next six months. An additional 43 percent say their home’s value will remain the same, with only 17 percent expecting their home’s value to drop.

“Homeowners are clearly confused about the housing market, and with good reason,” said Stan Humphries, Zillow’s chief economist. “Home values in different parts of the country have shown varied performance in the third quarter. While we have definitely seen some stabilization in recent months, there is a high likelihood that home values will see further declines driven by an increasing number of foreclosures coming into the market and, possibly, rising interest rates after the first quarter of next year.”

Humphries says the federal tax credits for homebuyers have the potential to stimulate demand and bring about a bottom sooner but, even so, he believes markets are unlikely to see a sustained period of significant appreciation in real terms.

“It seems that homeowners are still working under the assumption of a V-shaped recovery to home values when a long, L-shaped recovery is more likely,” Humphries said.

Regionally, homeowner confidence was all over the map in the third quarter, as home values in some parts of the country stabilized while other areas saw continuing declines.

Homeowners in the Northeast were the most cynical about home values over the past year, although the region posted the highest percentage of homes increasing in value during that same time period, Zillow said.

One in five Northeastern homeowners believes their own home gained value in the past 12 months, according to Zillow’s survey. But in reality, the company’s market analysis shows that 31 percent of homes in the region increased in value.

Homeowners in the West were the least realistic in the country, with 28 percent believing their own homes’ values increased in the past 12 months. According to Zillow, only 17 percent of homes in the region actually increased.

Nationally, 25 percent of homeowners believe their own home’s value increased in the last 12 months. Zillow says 22 percent of U.S. homes actually gained value, while 72 percent depreciated.

The company also noted in its study that the level of pent-up supply – a component of the industry’s so-called shadow inventory – remained relatively steady from the second quarter to the third. Nearly 31 percent of homeowners surveyed by Zillow indicated they would be at least “somewhat likely” to put their home up for sale in the next 12 months if they see signs of a real estate market turnaround. That figure is up slightly from 29 percent in Q2.

Homeowners said that hearing more general good news about the economy, the ability to sell their home for more than they paid, and evidence of increasing home sales in their local market would be the primary indicators of a real estate turn around.

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