Despite Freddie Mac reporting a slowdown in home price growth in the fourth quarter of last year, market observers said that the results are not as bad as expected. Further, home price growth remains strong, although not as high as recent experience, and is expected to level off to a more historically normal rate this year.

"The period between mid-2000 to mid-2001 is when we saw the fastest national average house price growth across the U.S.," said Frank Nothaft, chief economist at Freddie. "What we've seen since then is a gradual deceleration in the rate of house price growth. And that continued with the fourth quarter 2002 data that we've just released."

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