Percentage of Underwater Homeowners Rises

Seattle, WA, May 9, 2011 -- More than a quarter of U.S. homeowners owed more than their properties were worth in the first quarter, Zillow Inc. said today.

Homeowners with negative equity increased from 22% a year earlier to 28% this year as home prices fell 8.2% over the past 12 months.

About 27% of homes were “underwater” in the fourth quarter, according to Zillow, which runs a website with property-value estimates and real-estate listings.

Home prices fell 3% in the first quarter and will drop as much as 9% this year as foreclosures spread and unemployment remains high, Zillow Chief Economist Stan Humphries said.