The average homeowner continued to show a better sense of how much their home was worth in September, according to the retail mortgage lender Quicken Loans. This finding marked the fourth consecutive month that homeowner estimates have moved closer to appraised values, although the typical homeowner continued to overestimate the value of their property.

In its Home Price Perception Index for September, the average appraisal fell 1.14 percent below a homeowner's expectation. This was an improvement from 1.7 percent lower in June, 1.55 percent lower in July, and 1.35 percent lower in August.

"An appraisal can vastly impact the mortgage process," said Bill Banfield, executive vice president of capital markets at Quicken Loans. "This number alone can impact how much a buyer needs to bring to closing, or the current equity a homeowner has when refinancing. If homeowners are aware of local home values and how they are changing, it will assist with a smoother mortgage process."

Value perceptions varied from region to region. The average appraisal was only 0.93 percent lower than expected in the West, compared to 1.14 percent lower in the South, 1.21 percent lower in the Northeast, and 1.31 percent lower in the Midwest.

Quicken Loans also looks at home price perceptions in 27 major cities in the United States. Appraisals were greater than expected in 17 cities and fell within 1 percent of a homeowner's estimate in 14 cities.

Homeowners were most likely to underestimate their home value in Dallas, where the average appraisal was 2.87 percent higher than expected. Appraisals came in 2.52 percent greater than a homeowner's estimate on average in Denver and 2.12 percent higher in Seattle.

Overestimated values were most common in Philadelphia, where the typical appraisal was 2.89 percent less than expected. Appraisals fell 2.68 percent short on average in Baltimore and 2.24 percent short in Cleveland.

Quicken Loans also updated its National Home Value Index, which rose 0.44 percent from August and 3.38 percent from September 2016 to 104.44. A figure of 100 is equal to home values in 2005.

The Home Value Index in the Northeast climbed 0.91 percent from the previous month and 2.71 percent from the previous year to 98.68. In the Midwest, the figure of 87.25 was up 0.66 percent from August and 5.64 percent from September 2016.

The South had the strongest growth from the previous month, with its Home Value Index rising 1.33 percent from August and 2.08 percent from September 2016 to stand at 103.98. The most significant year-over-year growth occurred in the West, where the index of 128.09 was up 5.77 percent from September 2016 and 0.98 percent from August.

"Home values are highly impacted by the balance of buyer's interest and the volume of available homes," said Banfield. "Currently this is highly tilted, with a lack of home inventory leading to rising values. One of the most impactful things that could be done to achieve sustainability is an increase in new home building. If move-up buyers move on to new construction, it will open up starter homes for first-time buyers."

The Home Price Perception Index uses data from refinance mortgage applications, where a homeowner supplies an estimate of their home's value and an appraised value is determined later on. The Home Value Index is derived from appraisals conducted for both purchase and refinance mortgages.