The Office of Federal Housing Enterprise Oversight (OFHEO) reported home prices based on their seasonally-adjusted purchase-only index declined 1.36% in the second quarter (5.44% annualized) following a 1.68% decline (6.72% annualized) in the first quarter. 

Year-over-year, home prices fell 4.8% compared to negative 3.03% from 1Q07 through 1Q08. Earlier this morning, the S&P/Case-Shiller Index reported that from 2Q07 to 2Q08, home prices fell by 15.4%, only slightly wider than the 1Q07 to 1Q08 chang(negative 14.2%). OFHEO's all transaction House Price Index was down 1.4% for the quarter, and down 1.7% over the four-quarter period. 

For the month of June, home prices were flat with gains from the Mountain, West North Central, West South Central, East South Central, New England and South Atlantic states offsetting declines in the Pacific, East North Central, and Middle Atlantic states. 

The West South Central States recorded the largest monthly appreciation at 1.6%, while the Pacific states recorded the largest monthly decline at 1.7%. Year-over-year, home prices in the Pacific states have dropped 16.4%, while the West South Central states have increased 2.3%. 

For June, the S&P/Case-Shiller HPI reported home prices declined 0.5% for the 20-city index.

According to the OFHEO, in the all-transactions index, the top five states in terms of price appreciation between Q2 2007 and 2008 were Oklahoma (4.9% annualized), Wyoming (4.4%), South Dakota (3.8%), North Carolina (3.6%) and North Dakota (3.6%).  The bottom five were Rhode Island (negative 4.9%), Arizona (negative 9.2%), Florida (negative 12.4%), Nevada (negative 14.1%) and California (negative 15.8%).

The MSAs with the best growth over the past year were Houma-Bayou Cane-Thibodaux, LA (9.1%), Decatur, AL (6.4%) and Charleston, WV (6.0%). The sharpest declines were Merced, CA (-34.5%), Stockton, CA ( negative 31.7%) and Modesto, CA (negative 28.5%). 

"Tighter credit conditions and relatively high inventory levels led to some sharp price declines in the second quarter," OFHEO director James Lockhart noted.  "However, the majority of Metropolitan Statistical Areas (MSAs) posted positive four-quarter growth."

"Nationally, the substantial declines in the weakest markets have driven seasonally adjusted prices down to late-2005 levels," said OFHEO's Chief Economist Patrick Lawler.

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