SEATTLE (Zillow) —The annual rate of U.S. home value appreciation slowed in March, to 5.1% from 5.4% in February, a sign of moderation in a market that had been appreciating at an unsustainable pace for several months, according to the first quarter Zillow Real Estate Market Reports.

The Zillow Home Value Index (ZHVI) rose to $157,600 as of the end of the first quarter, up 0.5% from the fourth quarter of 2012. Home values in the fourth quarter rose 2.1 percent from the third quarter of 2012.

Historically, housing markets can expect annual home value appreciation of roughly 3%, according to Zillow research. Looking ahead, the Zillow Home Value Forecast shows national home values increasing by 3.2% through March 2014, an annual appreciation rate more in line with historic norms.

But in some local markets, home values continue to rise at a breakneck pace. Five metros covered by Zillow experienced year-over-year appreciation of more than 20 percent: Phoenix (up 24%), Las Vegas (up 22.3%), San Jose (up 22.1%), San Francisco (up 21.4%) and Sacramento (up 20.1%).

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“The national housing market has rebounded strongly over the past year. But the sometimes dramatic home value run-ups experienced during these months were never expected to be sustainable, and recent slowdowns are indicative of a market that is slowly finding its natural level,” said Zillow Chief Economist Dr. Stan Humphries. “Looking forward, we expect annual home value appreciation to continue to slow, as more inventory comes up for sale. But pockets of very rapid appreciation will remain, a troubling sign of volatility and a potential future headache as affordability is compromised and homes begin to look much more expensive to average buyers. This affordability issue may become acute in many markets in a couple years once mortgage rates begin to return again to normal levels.”

Further underscoring the unevenness of the recovery, seven of the top 30 metro markets covered by Zillow saw a decline in home values in the first quarter. The New York metro saw a decline of 0.3% in home values after three consecutive quarters of positive appreciation, the first quarterly decline in that metro since the first quarter of 2012. Chicago saw the greatest home value depreciation, with values falling 1.4% in the quarter after a flat fourth quarter of 2012.

A total of 5.11 out of every 10,000 homes were foreclosed upon in the first quarter, down 1.3 homes per 10,000 from the fourth quarter, and down 2.4 homes per 10,000 year-over-year.

In the rental market, national rents rose 0.9% in the first quarter compared with the fourth quarter, and were up 4.9% over the first quarter of 2012. The Zillow Rent Index (ZRI) stood at $1,290 at the end of March.