Home prices increased 8.5% nationwide over the 12 months ended March 31, up from 5.1% in the comparable period a year earlier, according to Freddie Mac.In the first quarter alone, prices rose at an annualized rate of 5.6%, Freddie Mac reported in releasing its quarterly Conventional Mortgage Home Price Index. The index showed that the Pacific states recorded the largest gains in home prices, which rose 14.3% for the 12-month period. The Middle Atlantic states of New Jersey, New York, and Pennsylvania followed with a 10.9% growth rate, and the New England states finished third with a 10.7% rate. "The first quarter of the year was great for the housing market," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "Low and declining mortgage rates over the quarter that bottomed out in March at 5.4% for 30-year, fixed-rate mortgages, pushed home sales to a healthy 7.37 million units (annualized rate), and this strong housing demand helped keep house price appreciation well ahead of overall inflation." The index was jointly developed by Freddie Mac and Fannie Mae. Freddie Mac can be found online at http://www.freddiemac.com.

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