03/18/2010 05:12 am ET Updated May 25, 2011

Home Prices Are Stablizing, But Foreclosures Still Account For 20 Percent Of Sales: Zillow

CNBC: On the way down and on the way up, home prices always lag sales, but they may be beginning to catch up. A new report from finds home values stabilized in the third quarter of this year, as sales of new and existing homes grew.

"While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines," according to the report.

That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2.

The question remains if this is a real trend or a temporary surge brought on by non-organic factors. The first-time home buyer tax credit added an additional 350,000 buyers to the housing market, according to the National Association of Realtors, and the Federal Reserve's investment in Fannie Mae and Freddie Mac mortgages and mortgage backed securities have kept mortgage rates artificially low.

And then there's the foreclosure quandary. Zillow estimates more than one fifth of all sales in September were foreclosure re-sales, up from 15 percent a year ago. Realtors have put that at a higher number. -- Diana Olick

Read the rest of the story here. For a slideshow of the most expensive housing markets, check out CNBC's story here.