The Office of Federal Housing Oversight reported today that the home prices were 1.1 percent higher in the fourth quarter of last year than they were during the third quarter, and 5.9 percent higher than they were during fourth quarter 2005. However, when home refinancings are exempted, the price index falls to 4.1 percent for the year, and 0.5 percent between the third and fourth quarters.

For all of 2006, the gains in prices were significantly lower than they have been in recent years, which ranged from 7.4 percent in 2002 to 13.2 percent in 2005. The states with the largest gains included Utah (17.6 percent), Wyoming (14.3 percent), Idaho (14.0 percent), Washington (13.7 percent), and Oregon (13.5 percent). The states with the lowest gains included Massachusetts (0.5 percent), Ohio (1.0 percent), Indiana (2.3 percent), and Minnesota (2.5 percent). Michigan was the only state to post a loss (0.4 percent). SEE THE REPORT HERE

The OFHEO report noted that price increases are decelerating particularly steeply in the Pacific Census Division, where prices grew 0.4 percent between the third and fourth quarter, nearly one percentage point below the growth rate in the prior period. California saw quarterly appreciation rates that were negative in 21 of the 26 cities on OFHEO's list of "ranked" metropolitan areas.

Credit Suisse, in a report to investors, said "We are witnessing a greater portion of the country falling into negative territory, which we believe could damage the psyche of existing sellers and lead to fewer potential new home buyers in the near-term."