California, Florida and Michigan accounted for the steepest losses and contained 45 of the 50 worst performing metropolitan areas for this period.

Economic analysis company Global Insight today released the first quarter 2008 update of the U.S. housing valuation analysis, House Prices in America, showing that single-family home prices fell for the third straight period, dropping at a steep 6.7 % annualized rate. Nationwide, 262 housing markets out of 330 in the study - the overwhelming majority of the nation's housing markets - experienced declines, accounting for 84% of all housing units and 89% of real estate value.

California, Florida and Michigan accounted for the steepest losses and contained 45 of the 50 worst performing metropolitan areas for this period. California and Florida had been among the most overvalued states for the past several years and Michigan is reeling from the impact of a slumping economy. Other housing markets in the bottom 50 include Las Vegas and Reno, Nevada and Bend, Oregon, areas cited in earlier House Price studies as being precariously overvalued and likely to be the next "shoe to drop."

House prices are being pushed down across the nation by fewer high-priced home sales and an abundance of foreclosed properties being sold at discount. Contributing to the downward pressure are significantly tighter credit standards which are reducing the amount of borrowing available for home purchases.

In the first quarter 2008, only eight housing markets - down from a peak of 53 in 2006 - were determined to be overvalued, representing only 1% of the U.S. single family housing stock and 2% of total real estate value, down from 32% and 16%, respectively, from 2006. Areas of the Pacific Northwest, including Bend, Oregon and Longview, Washington, continued to be among the most overvalued. However, other areas once extremely overvalued - the Northeast and coastal California and Florida - are now rated as fairly valued.

Additionally,, a number of widely dispersed and mostly smaller markets throughout the country that had seen less price fluctuation during the boom years experienced price resilience. The top nine housing markets registering price increases this period all had populations less than 300,000 and were as varied as Ithaca, New York; Billings, Montana; Houma, Louisiana; and Odessa, Texas.

James Diffley, group managing director of Global Insight's Regional Services Group, said, "The large price adjustments we have seen are precisely what was required before we could begin to talk of recovery."

Jeannine Cataldi, senior economist and manager of Global Insight's Regional Real Estate Service, added that, "The housing market will take some time to recover as consumers are constrained not only by tighter credit standards, but rising costs in other areas of the economy. There is also excess supply that needs to be absorbed, plus the rate of foreclosures entering the market needs to slow before housing can begin to pull out of its current downward trend."

The House Prices in America study, a joint effort by Global Insight and National City Corporation, examines the top 330 U.S. real estate markets, representing 78% of all existing housing units and 93% of all related real estate value, to determine what home prices should be, accounting for differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts. Markets with valuation premiums above 35% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local market price declines observed since 1985.