Buttressing similar directional findings released Tuesday by Standard & Poor's, the Office of Federal Housing Enterprise Oversight -- still releasing data under that name, despite new legislation creating a new regulating entity for both Fannie Mae (FNM) and Freddie Mac (FRE) -- said that its index of conforming home purchases found a 1.4 percent drop in home prices during the second quarter. The quarterly drop compares to a drop of 1.7 percent during Q1. Home prices have fallen 4.8 percent in the past year using purchase-only transactions, OFHEO said, the largest such decline in the index's 17-year history. Read the full report. But, much like the S&P/Case-Shiller indices suggested on day earlier, the OFHEO housing price index also showed signs of moderating the pace of price declines, even if declining prices continued to affect key housing markets nationwide. OFHEO's monthly purchase price index was flat between May and June on a seasonally-adjusted basis, but was down 5 percent since the April 2007 peak. In June, seasonally-adjusted prices in the Pacific census division -- including hard-hit California -- were 17.6 percent off their early 2007 peak, making it the worst performing division. By contrast, however, June prices in the West South Central division reached a new high. "Tighter credit conditions and relatively high inventory levels led to some sharp price declines in the second quarter," said Lockhart. "However, the majority of metropolitan statistical areas posted positive four-quarter growth." Nominal loss, real pain While OFHEO's national purchase-only house price index fell 4.8 percent between the second quarters of 2007 and 2008, prices of other goods and services increased 5.3 percent. Accordingly, the inflation-adjusted price of homes fell approximately 10.1 percent over the latest year.   "The most overbuilt areas of the country -- including California, Nevada, Arizona, and Florida -- contrast greatly with most other states, where prices are declining more moderately or even increasing," said OFHEO Chief Economist Patrick Lawler. "Nationally, the substantial declines in the weakest markets have driven seasonally-adjusted prices down to late-2005 levels." And, in real terms, the question becomes where inflation pushes losses for homeowners over the next four quarters; in particular, most expect the pace of price declines to stabilize, but the declines to continue for at least the next year. If inflation, as some expect, rears its head, homeowners may find themselves actually losing more on their home in real terms each month than what was observed to start 2008. For more information, visit http://www.ofheo.gov. Disclosure: The author was long FRE and held no other relevant positions when this story was published; indirect holdings may exist via mutual fund investments, as well. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.