Steep housing price declines have largely wiped out widespread extreme overvaluation of residential real estate, according to a new study released Thursday morning. Global Insight, an economic forecasting and financial analysis firm, said its Q2 update of housing valuation analysis found that home prices continue to fall across the country but at a slower rate than observed previously. Nationwide, house prices are down 4.8 percent from a year ago, this housing cycle's peak high point according to Global Insight's data. Prices fell in the second quarter in 152 of the 330 metro areas covered in the study, representing 46 percent of all single-family housing units in the U.S. The second quarter decline of an annualized 5.3 percent compares with a 6.6 percent annualized decline in the first quarter, which represented 81 percent of metro areas covered. In comparison, 295 metro areas posted declines in the fourth quarter of 2007. California, Florida and Michigan continue to account for the most severe losses, representing 43 of the 50 worst performing metropolitan areas. California and Florida had been among the most overvalued states for the past several years. Michigan continues to struggle with the impact of a slumping economy. Other housing markets in the bottom 50 include Las Vegas, Nevada; Phoenix, Arizona; and Washington, D.C. Six housing markets, down from a peak of 51 in 2005, and virtually unchanged from the first quarter of 2008, were judged extremely overvalued in the second quarter, amounting to 1 percent of the nation's single family housing stock. Extreme overvaluation is limited to Hawaii, Washington, Oregon and Utah. Pockets of overvaluation remain where they have been - along the East and West Coasts - while the middle of the country remains either fairly valued or undervalued, though some previously overvalued areas of the Northeast and Coastal California and Florida are now rated as fairly valued. While think-tank said its data suggested that many home prices in a growing number of local markets now "reflect a healthy balance in relation to long-term fundamentals," the group also asserted that real estate markets are not ready to recover. "The building and financing excesses of the boom years have yet to be worked off," according to the report. "There remains a huge inventory of unsold homes on the market with foreclosures adding more daily." James Diffley, group managing director of Global Insight's regional services group, said that "though the fundamental overvaluation has largely been removed, downward pressures on home prices remain strong." Related links: full study For more information, visit http://www.globalinsight.com.