Home values may have plummeted in the past year, but prices are still significantly out of line with apartment rents, according to a new study.

The average monthly cost of owning a home in the Valley is roughly $1,532, compared with $862 for a two-bedroom apartment or $1,256 for a three-bedroom, a study by the Center for Economic and Policy Research shows.

The trend is similar in other major metropolitan areas across the country, including Las Vegas, and has resulted in increased demand for rental housing.

In the past year, the number of renter households nationwide jumped by nearly 1 million, compared with an increase of 139,000 in homeowner households, according to the center’s study.

Despite the major shift in demand, however, the growth in Phoenix rental rates has slowed considerably.

That’s mainly because the increased demand has been matched by a growing supply of houses for rent by desperate sellers and investors. Developers are also turning failed condominium conversion projects back into apartments.

The result: More landlords are offering concessions these days, the most popular of which is a month’s free rent, so now may be the time for renters to lock in rates.

Here’s the good news: Valley home builders and real estate agents have been reporting more interest from buyers since the beginning of the year.

The bad news is that the increased activity isn’t necessarily translating into actual sales.

So why aren’t buyers actually biting?

Some are still waiting for prices to drop lower. Others harbor worries about the health of the national economy. And experts say tightened lending standards have also made it difficult for many people to qualify for financing.

Still, many industry professionals I’ve talked, along with some national groups, are  optimistic that the market will start to come around or at least level off by the end of 2008.

The National Association of Realtors said it expects to see sales begin to improve over the summer. The industry group also estimates sales of existing homes will total 5.39 million this year, then rise 6.1 percent to 5.72 million next year.

A new survey of homeowner confidence shows many Americans may be out-of-touch with reality.

Some 72 percent of homeowners recently surveyed believe their home’s value has gone up or stayed the same in the past year, according to Zillow.com.

But in reality, 75 percent of homes nationwide declined in value in the past year, the real estate Web site reported. Nearly 1,600 adults were surveyed by Harris Interactive for the Zillow study.

Home values in the first quarter 2008 were also down 7.7 percent from the same period a year ago — the largest year-over-year decline in more than a decade, according to Zillow.

“While we assume there’s a fair bit of owner denial reflected in these results, we also believe a large portion of the population simply isn’t paying close attention to their housing market because they’re not currently looking to sell or refinance,” said Stan Humphries, Zillow’s vice president of data and analytics.

The number of pending foreclosures in the Valley climbed to 20,407 in April — up from 5,385 reported at the same time last year, according to a recent study.

Some 6,143 properties received notices of foreclosure last month alone and another 2,968 were actually foreclosed on, according to Valley research company Information Market.

Tom Ruff, a partner in the firm, said that foreclosures could peak in the third quarter of this year, but whether things settle down by then is anybody’s guess.

Thousands of Arizona families are sinking into foreclosure every month with no end in sight.

A total of 27,404 properties — or roughly one in every 95 households — entered some stage of foreclosure in the first quarter 2008, a new report by data firm RealtyTrac shows. That’s up nearly 245 percent from the same time last year.

Nationwide, nearly 650,000 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported in the first three months of the year, a 112 percent increase from a year ago, according to RealtyTrac. Arizona posted the third highest foreclosure rate in the nation, behind only Nevada and California.

At the county level, Pinal County recorded 2,021 foreclosure filings; Maricopa County had 21,114; and Pima County reported 1,864 in the first quarter, the report shows. The Valley’s foreclosure rate ranked 7th of 100 metropolitan areas studied by RealtyTrac.

The top 10 states with the country’s worst foreclosure rates also included Florida, Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

You can search for East Valley foreclosure properties at Tribunehomefinder.com.

Home builders are slightly more confident in the housing market these days, at least compared with the end of last year, a new report shows.

But an index tracking builder confidence remained stagnant for the third month in a row in April — up two points from a record-low set in December, according to the National Association of Home Builders.

“While builders continue to report improvement in traffic through their model homes compared with late last year, this activity has not translated to actual sales,” association chief economist David Seiders said.

The National Association of Home Builders/Wells Fargo Housing Market Index gauges builder perceptions of current home sales, sales expectations for the next six months and buyer interest.

Reports from builders in the Valley seem to reflect a similar trend.

Model homes in new subdivisions are getting more buyer interest, but some people are coming back a half a dozen times or more to look at homes and still won’t bite, industry observers say.

Still, things are looking up for the Valley’s new home market.

Home sales have been holding steady for the past three months. And a survey of 4,754 floor plans showed 69 percent either remained at the same price or saw a price increase, according to local analyst RL Brown.

From indexes and LTV ratios to discount points, mortgage industry jargon baffles many borrowers, who often sign the mounds of paperwork put in front of them without ever reading the documents.

As a result, many homeowners have found themselves in loans they didn’t understand and ultimately couldn’t afford, sending them into foreclosure.

The National Consumers League hopes to prevent future foreclosures with a Web site that takes potential buyers through the complicated financing process from choosing the right loan to protecting against predatory lending.

Mortgagetown.org includes advice on how to pick a loan officer, access to a glossary of mortgage terms, information on how to track who owns your mortgage and other tips.

“With millions of homeowners rightfully concerned about predatory lenders, fraud, and foreclosure, it’s critically important that both current and future homeowners are educated, prepared and protected,” said Sally Greenberg, executive director of the consumers group.

Nationwide, sales of new homes dropped 8.5 percent in March and were down 36.6 percent from the same month last year, according to a report from the U.S. Department of Commerce. The median new home price was $227,600.

Here in the Valley, the new home market’s free-fall seems to be coming to an end. Sales have held steady so far this year, hovering between 1,800 and 1,900 a month, a report by housing analyst RL Brown shows.

Some builders are even raising prices in an attempt to create a sense of urgency for buyers.

But the industry isn’t out of the woods just yet. They’re still competing with thousands of bank-owned properties and desperate sellers who are starting to slash prices. Experts say that’s especially true in outlying areas, such as Maricopa, and more foreclosures are on the way.

Nationwide, 70 percent of seriously delinquent borrowers aren’t in any type of loan work-out program despite ramped up foreclosure prevention efforts by lenders and government officials.

That’s according to a new study by the State Foreclosure Prevention Working Group, which tracked data from 13 of the country’s largest subprime mortgage services from October 2007 to January 2008.

In that time, the number of distressed borrowers in loss mitigation has risen but has been matched by an increase in delinquent loans.

“The collective efforts of servicers and government officials to date have not translated into meaningful improvement in foreclosure prevention outcomes,” the report states.

The study also noted that loss mitigation departments at banks have become severely overloaded with delinquent loans — a phenomenon many Valley real estate agents are reporting.

Arizona Attorney General Terry Goddard also said this week that the state needs to explore new approaches to preventing foreclosures.

“We continue to see a rising number of foreclosures in Arizona, which is a significant drag on Arizona’s economy,” Goddard said in a statement.

Nationwide, sales of existing homes fell 2 percent last month, as buyers continued to wait for more price drops and borrowers found themselves shut out of the mortgage market.

The seasonally adjusted annual rate of 4.93 million sales reported in March is also 19.3 percent below a year ago, according to a report from the National Association of Realtors.

“It appears there is some over-reaction on the part of some lenders now in requiring higher downpayment percentages than may be necessary,” association President Richard Gaylord said in a statement.

Despite Arizona buyers facing the same hurdles, sales of existing Valley homes rose in March, bucking the national trend.

A total of 4,335 sales were recorded last month, up 15.6 percent from February but down 19.5 percent from a year ago, according to Arizona State University’s Realty Studies department.