Home prices increased at an annualized rate of 8.7% nationwide in the first quarter, down from a revised rate of 12.9% in the fourth quarter, according to the Conventional Mortgage Home Price Index released by Freddie Mac.The Pacific states recorded the biggest price increases, with a 13.3% annualized growth rate, Freddie Mac said. The South Atlantic states experienced the second-highest annualized gains in the first quarter, with a 12.7% growth rate, and the Middle Atlantic states came in third, at 9.8%. "Home prices are starting to feel the effects of the upward trend in mortgage rates," said Frank Nothaft, Freddie Mac's chief economist. "That trend continued during the first quarter, with 30-year fixed mortgage rates climbing from an average 6.15% in January to 6.32% in March, according to the Primary Mortgage Market Survey.... We are expecting about half of the increase that we saw in the national average home-value appreciation in 2005 and 2006, which puts annual home price growth between 6% and 8%, depending on how fast interest rates rise over the remainder of the year." The index was jointly developed by Freddie Mac and Fannie Mae. Freddie Mac's website address is http://www.freddiemac.com.

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