Arizona had nation's fourth-largest drop in 1Q home prices, federal report shows

The latest read on the national housing market shows home values are continuing to drop at historic rates.

The Washington-based Office of Federal Housing Enterprise Oversight reported Thursday that home prices fell 3.1 percent nationwide in the first quarter compared with the same period last year. The index also fell 1.7 percent from fourth-quarter 2007 to first-quarter 2008, the largest quarterly drop on record.

Prices fell in 43 states, with California and Nevada showing the biggest declines, at more than 10 percent. Arizona had the fourth-biggest drop, with prices down 5.5 percent in the past 12 months.

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"The large overhang of real estate inventory awaiting sale continues to force price declines in many areas, but particularly in places that had seen very sharp appreciation," Patrick Lawler, the agency's chief economist, said in a prepared statement.

The government index is calculated by tracking mortgage loans of up to $417,000 that are bought or backed by the government-sponsored mortgage finance companies Fannie Mae and Freddie Mac. Legislation enacted in February temporarily raised the limit to $729,750 in high-cost areas.