The period of tumbling home values in the U.S. housing market seems to have come to an end. Finally. For the first time since 2007, real estate statistics site Zillow reported a year-over-year rise in nationwide home values.

From the second quarter of 2011, to the second quarter of 2012, values rose 0.2% to a median value of $149,300. This includes a 2.1% increase from the first quarter of this year.

It’s difficult, however, to create an accurate portrayal of exactly what’s going on in the U.S. housing market based on these numbers alone. Consider that in such a diverse country, trends are still very localized, on a state-by-state, city-by-city basis. For example, values in Phoenix shot up by 12.1% over 2011 numbers, although their median price falls short of the national average at $136,200. Over the same time period, Chicago suffered the greatest loss, watching home values fall by 5.8%, to an average of $158,600.

One of the biggest threats to the American housing markets continues to be foreclosures. With a renewed ability for banks to pursue foreclosures, Zillow’s chief economist Stan Humphries predicts that the rate of foreclosures is likely to increase.

If that happens, then demand for homes will need to increase at a similar rate in order to prevent these home values from falling again. A greater number of foreclosures could saturate the market and ultimately result in too many homes being available at the same time, requiring a decrease in prices across the board to help find buyers.

With weaker than expected job numbers coming out recently, the U.S. economy could be hard-pressed to generate the demand to offset increases in supply. Consider also that those patiently waiting for their properties to grow in value may put their homes on the market, compounding the need for demand and likely mitigating growth.

In spite of the skepticism, Zillow expects that over the next 12 months, the housing market could grow by a relatively flat 1.1%; again considering that some areas may have large growth while others continue to stumble.

With statistics from “Home Values Rise for First Time in 5 Years”, Les Christie, CNNMoney (July 24, 2012)