With the home price appreciation driving higher turnover rates, mortgage participants have long considered the value of homes as a telling indicator of the state of the housing market. Aside from this, the degree to which house prices rise is also widely seen as a good basis for evaluating prepayment speeds because rapid home price appreciation tends to result in higher cash-out activity.

Based on such an examination, Merrill Lynch analysts concluded there are signs of slowing in home price growth. Merrill's report focused on the different home price series that track housing prices.

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