Prices have fallen 7 percent over the past year, according to second quarter data from Fitch. This brings the nation’s total price decline from its peak to 38 percent.

While prices declined annually in the second quarter, they posted a 3 percent increase quarterly. Fitch warns this is typical for the second quarter because homebuyers often re-enter the market after the winter.

Thus, Fitch does not believe the recent rise is a sign of what’s to come. In fact, prices have not reached bottom, according to a new quarterly home price projection from Fitch, which predicts prices will fall another 13 percent.

This decline is the result of high unemployment, excess inventory, and restrictive lending standards, according to Fitch.

The biggest problem, according to the agency, is “persistently high unemployment rates.” Next, Fitch cites 5 million distressed homes for sale, much of which is located in Florida, California, Illinois, and New York.

Factors that would be conducive to home sales, such as historically low mortgage rates and declining prices, are countered with restrictive underwriting and qualification standards that push potential borrowers out of the market – thus preventing sales, leaving inventory untouched.

While some regions may see further declines in the future, others may maintain their current levels for the foreseeable future.

On a seasonally-adjusted basis, prices in 33 states declined over the second quarter, while this number drops to 11 when seasonality is not taken into account.

Annually, prices declined in 49 states – whether seasonally adjusted or not.

While unemployment has remained high, Fitch does note a couple positive signs for the market – low interest rates and a fluctuation in the ratio of population to homebuilding. “After significant overbuilding throughout much of the 2000s, population is now growing approximately twice as fast as the building supply,” Fitch says.

In the Northeast, particularly in New York, Fitch sees large price declines on the horizon. In part, this is because prices in the region have not fallen as much as in other regions of the country and remain overvalued.

Prices in the Northeast are 36 percent above their 2000 levels.

At the other end of the spectrum, the states that have experienced the greatest price declines are Nevada, Arizona, Florida, California, and Michigan.

Michigan is unique in that its price growth during the bubble years was quite modest. Prices increased 11 percent from 2000 to the national peak, while the nation saw a 65 percent increase.

Fitch believes Michigan’s homes are currently undervalued by 5 percent.

When prices began to fall, however, Michigan was not spared. From the second quarter of 2005 to the second quarter of 2011, prices dropped 45 percent.

While Michigan’s unemployment is not notably high, the state’s labor force participation has dropped from 67 percent in 2000 to 61 percent in the second quarter of this year. At the same time, more than half a million people have left the state over the past decade.