* Home values also fell in first quarter
* Large California markets show signs of reaching bottom
* Home value bottom expected in third quarter
* More than 1 in 1,000 homes was being foreclosed in March
By Julie Haviv
NEW YORK, May 10 (Reuters) - A growing percentage of U.S. homeowners were saddled with "underwater mortgages" in the first quarter, accounting for almost one in four homes in a trend that poses a serious threat to the housing market's recovery, real estate website Zillow.com said on Monday.
U.S. home values also declined again in the first quarter, Zillow reported.
Homeowners with "underwater" mortgages -- where the amount owed on the mortgage exceeds the value of the home -- are more prone to defaults and foreclosures.
The percentage of American single-family homes with mortgages in negative equity rose to 23.3 percent in the first quarter from 21.4 percent in the fourth quarter, according to the Zillow Real Estate Market Reports.
U.S. home values in the first quarter were down 3.8 percent year-over-year and down 1 percent quarter-over-quarter, to $183,700, according to the Zillow Home Value Index. It was the 13th consecutive quarter of year-over-year declines.
"Several large California markets have shown significant stabilization in home values, marking what could be a bottom," Stan Humphries, Zillow chief economist, said in an interview. "But, most markets across the country remained in decline."
Home values declined year-over-year in 106 of the 135 metropolitan areas tracked by Zillow.
But home values in several large California metro areas -- Los Angeles, San Diego, San Francisco, Santa Barbara and Ventura -- have risen significantly for at least the past 10 months, up from lows reached in April or May 2009.
Humphries said the government's recently expired homebuyer tax credits likely only shifted the timing of sales, rather than creating new demand.
Buyers seeking to take advantage of the tax credits had to sign purchase contracts by April 30 and have until June 30 to close on the sales.
Humphries said inventory levels were rising during the first quarter and home values continued to decline at a steady clip, even when the tax credits were still in place.
As a result, national home values are likely to reach bottom in the third quarter, and home value appreciation will likely then be near zero for some time, possibly as long as five years, he said.
The number of homeowners losing their homes to foreclosure across the country rose to a new peak in March, with more than one in every thousand homes, or 0.11 percent, being foreclosed, the highest since Zillow began recording national foreclosure data in 2000.
Foreclosure resales remained high in March, accounting for 22.2 percent of all U.S. home sales. Foreclosure resales made up the majority of sales in several metropolitan areas, including Merced, California, at 66.3 percent; Madera, California, at 63 percent; and the Modesto, California, at 61.7 percent, the reports showed. (Editing by Leslie Adler)