The rate of decline in home prices across key U.S. markets continued to slow in October compared to one year earlier, evidence of what one economist says may be a forming trough in home price depreciation. A home price index published by First American CoreLogic, released earlier this week, found that home prices across the country declined 10.4 percent in October, representing a slight improvement over Sept.'s reported 11.2 percent decline. "The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines,” said Mark Fleming, chief economist for First American CoreLogic. “However, the rapid contraction in the economy, deteriorating labor markets, the large inventory of unsold homes and increasing defaults suggests that home prices will continue to decline but with a moderating pace throughout 2009, particularly given the surge in FHA lending which typically has a lower than average sales price." Early preview data for November indicated continued improvement, as well, with an anticipated decline of 9.6 percent, Fleming said. Including the October HPI data, home prices have now maintained a steady annualized depreciation rate of between 10 and 11 percent for nine months in a row, perhaps signaling a forming floor under what have been free-falling home prices. That's not to say price declines are over -- not by any means. Using the LoanPerformance HPI, the Federal Reserve has estimated that the total value of all properties has declined by over 2 trillion dollars over the last 12 months ended in Q3 2008. And more will certainly come. But if Fleming is correct, price corrections may come at a more measured pace in 2009. Where the pain is In its rankings of the top 10 best and worst performing markets, California now holds the distinction of having all 10 of the worst performing markets; Peoria, IL ranks as the city experiencing the highest appreciation rate in the country, year over year. Among the nation's 25 largest core-based statistical areas, First American CoreLogic reported that Riverside-San Bernardino-Ontario, Calif. continued to lead the way in price declines, posting an annualized 28.79 percent drop in October. The Oakland-Fremont-Hayward CSBA in Northern California wasn't far behind, posting a 28.55 percent decline. But the nations worst markets lie in some smaller markets in NorCal: Salinas (-29.06%), Merced (-28.97%) and Stockton (-28.86%). Statewide, it should surprise anyone that California, Nevada, Arizona and Florida are leading the way in price declines in 2008; what may surprise some, however, is the fact that Rhode Island (-16.12%) and Wyoming (-13.46%) rank in the top 10 for price declines. First American CoreLogic reported that forty-four states experienced annual price declines as of October, up from 41 in September. West Virginia (5.9 percent), South Dakota (2.9 percent) and Texas (2.7 percent) are the only states exhibiting meaningful price increases, according to the data; all states posting annual price increases account for just 13 percent of the U.S. population, CoreLogic reported. In other words: if real estate prices are rising where you live, you're not in the majority. But the decelerating trend in home price declines could portend some good news for the months ahead, should it continue; after all, during the holidays, it seems appropriate to find something worth hoping for. Write to Paul Jackson at paul.jackson@housingwire.com.