Las Vegas home values as measured by Zillow fell 4.2 percent in the third quarter and pushed the region’s percentage of underwater properties to 80.2 percent.

The number of homes underwater -- when property owners owe more on their mortgage then the home is worth -- increased from 78.1 percent in the second quarter, the Seattle-based firm reported. Phoenix ranked second with 68 percent underwater during the third quarter.

“The high percentage of homeowners in negative equity continues to be troubling in that it represents a huge number of people who are not only more vulnerable to foreclosure but who are essentially trapped in their current homes and are prevented from selling and buying a new home,” said Zillow Chief Economist Stan Humphries. “This has profound implications for future demand and will be a millstone around the neck of the housing market.”

In September, 39 percent of homes sold in Las Vegas were for a loss, up from 20 percent in September 2009. Nationally, 27 percent of the homes sold in September were for a loss, the firm reported.

Zillow, which says it measures the value of all homes and not just those sold, reported home values have fallen 58 percent since their peak in May 2006 -- back to August 2000 levels.

In Las Vegas, 47 percent of all home sales in September were foreclosure sales, down from 49 percent in September 2009. Nationally, foreclosures comprised 20 percent of all sales.

Zillow reported that while the valley’s home values fell 4.2 percent in the third quarter compared to the third quarter of 2009, unincorporated areas of Clark County fell the most. That includes a 9.2 percent decline in Paradise and 5.3 percent in Enterprise and Spring Valley. Mount Charleston had a 23 percent decline.

Among cities, Las Vegas fell 3.8 percent, Henderson fell just less than 2 percent and North Las Vegas fell just less than 1 percent.

Boulder City had a 7 percent increase and Summerlin South rose nearly 7 percent as well, according to Zillow.

“While not unexpected, the unceasing declines in home values signal that we’re in for a long bleak winter of continuing troubles for the housing market,” Humphries said. “The length and depth of the current housing recession is rivaling the Great Depression’s real estate downturn and with encouraging signs fading, will easily eclipse it in the coming months.”