It's not exactly like waiting for Christmas or the first day of summer vacation, but we do look forward to the release of our favorite housing report each quarter; the Office of Federal Housing Enterprise Oversight (OFHEO) House Price Index.

The HPI uses information from Freddie Mac and Fannie Mae (for which OFHEO has supervisory oversight) to estimate house prices based on mortgage closings of the same houses over time.

In other words, these are actual one-on-one comparisons of sales prices or appraisal figures for homes purchased or refinanced over the past 32 years. If a house has had two mortgage closings through Freddie or Fannie during that period, it is included in the 32 million transaction data base. However, if a home sale goes through a different funding source, seller financing or the subprime market for example; exceeds the dollar limit for conforming mortgages, or is purchased with cash it will fall outside of the survey universe.

The advantage to this methodology is obvious; one is comparing apples with apples. A house purchased in 1984, refinanced in 1990, sold again in 1998 and refinanced in the first quarter of 2007 will have four data points in the system upon which to construct a portrait of appreciation. The disadvantages of course are that there is no way to necessarily account for property improvements which would drive home price increases beyond the general appreciation in the area and higher priced properties are pretty much excluded from the survey, as are purchases and refinances where the major secondary market participants do not play a role.

The HPI for the first quarter of 2007 was released on Thursday and showed a price appreciation that was 0.5 percent higher than in the fourth quarter of 2006. This is the lowest quarterly appreciation recorded since the first quarter of 1998 and compares poorly to the price appreciation experienced between the two previous quarters, (Q3 and Q4 of 2006) of 1.3 percent. Prices in the first quarter of 2007, however, were 4.3 percent higher than in the same quarter in 2006 but again this is the lowest year-over-year appreciation since the third quarter of 1997.

When refinances are filtered out of the data and only information on home purchases is included, the price appreciation between quarter one of 2006 and the same period in 2007 was only 3.0 percent.

OFHEO Director James B. Lockhart said "Although some forecasters expected to see a drop in the HPI, nationwide house prices continued to rise in the first quarter of 2007, albeit at the lowest rate in 10 years. As always, real estate prices are local with seven states showing double-digit annual appreciation rates and seven with rates less than 20 percent. Seven states, including Florida and California, also showed home price depreciation in the first quarter."

Still, house prices grew faster over the past year than prices of non-housing goods and services. The 4.3 growth in home price appreciation compares favorably to the non-housing Consumer Price Index of 1.6 percent.

Of course, as Director Lockhart pointed out, all real estate is local and the Mountain Census Division had the strongest housing market with a quarterly appreciation of 1.11 percent and a one-year increase of 7.47 percent. The four states, Utah (17.0 percent,) Idaho (12.3 percent,) Montana and Wyoming (11.7 percent each) with the greatest four-quarter appreciation were all located in the Mountain Census Division.

The other states topping the chart were New Mexico (11.21 percent) and Oregon (10.77 percent.)

The West South Central region was tied with a quarterly growth of 1.11 percent and second on an annual basis at 6.75 percent. New England trailed the nation with a quarterly price appreciation of 0.03 and a yearly increase of 1.11 percent.

Washington State, in the otherwise low ranked (6th) Pacific Census Division, also fared well, coming in fifth as a state with 11.63 yearly growth. The state also had five of the 20 cities with the greatest four quarter appreciation. Only five of Washington's 12 largest metro areas had an appreciation rate of less than 10 percent.

On the down side, the seven states that showed negative appreciation for the quarter were Florida (-0.34), West Virginia (-0.19), Maine (-0.13), California (-0.84), Nevada (-0.52), Massachusetts (0.47), and Michigan (-0.20). The last two states also had a negative rate of appreciation year-over-year of -0.56 and -0.66 respectively.

Data on hundreds of large and medium sized metropolitan areas are included in the OFEHO study. To see how your locality ranks over the last quarter, year, and five year period in terms of house price appreciation visit the website at ofheo.gov.