Purchase prices for houses are sliding downward at an accelerating pace, according to home price data released Thursday by the Office of Federal Housing Enterprise Oversight (OFHEO). In the first quarter of 2008, OFHEO's purchase-only home price index dropped a seasonally adjusted 1.7 percent compared to the previous quarter's 1.4 percent decline. Year-over-year, the index plummeted 3.1 percent.

That may not sound like much, relative to recent plunges in single-family construction activity, but that 3.1 percent figure represents the biggest such drop in the 17 years that OFHEO has collected the data for the purchase-only index. James B. Lockhart, OFHEO's director, tried to see both sides of the story in his comments on the results. "For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets," he said in a statement. "To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates."

OFHEO's all-transaction home price index, which tracks refinancing as well as new purchases, essentially held steady. This index slipped just 0.2 percent in the first quarter and barely inched downward year-over-year with a .03 percent decline.

Regionally, the worst states for annual home price declines (including purchases and refinancings) in the first quarter are also the states that have been showing up with high foreclosure rates. They are:

The following states registered the highest annual price appreciation:

For more information and detailed market information, visit http://www.ofheo.gov/newsroom.aspx?ID=435&q1=1&q2=None.

Alison Rice is senior editor, online, at BUILDER magazine.