Should home buyers, sellers and Realtors be troubled by the federal government's latest data on home prices? Is the housing "bubble" beginning its inevitable bust, as predicted by bearish Wall Street economists?

Neither of the above. The latest quarterly national home price appreciation statistics from the Office of Federal Housing Enterprise Oversight (OFHEO) reveal that some of the unsustainably high rates of appreciation of the late 1990s into 2001in some parts of the country are now over.

Forget the years of 20 percent-plus appreciation in San Jose, CA. Houses there depreciated by 0.39 percent on average during the past 12 months.

Forget those high double-digit rates of price gain for San Francisco. Houses there increased by just 2.86 percent from October 2001 to October of this year.

Nationwide, according to OFHEO's third-quarter housing price index study, the national average appreciation rate dropped to just 0.84 percent--an annualized rate of 3.36 percent. That was down from the second quarterÕs robust 2.39 percent--an annualized 9.86 percent. More ominous was the fact that 33 out of the 185 metropolitan markets tracked by the federal survey showed net depreciation, ie., actual declines in home values. This was the largest group of negative-growing markets in any survey by the agency since the mid-1990s.

Seven states also reported net declines in home values for the quarter--Illinois, Kansas, Michigan, South Dakota, Alaska, Vermont and Wisconsin.

Countering these negatives in the OFHEO survey, however, were dozens of markets where housing price growth remains strong--amazingly strong in view of the softeness in the national economy overall.

For example, a number of states along the East coast and in New England produced year-to-year jumps in home appreciation rates ranging from 9 percent into the double digits. These include Rhode Island (up by 14.06 percent for the year), New Jersey (up 10.98 percent), New York (up 10.21 percent), Maine (10.12 percent), Maryland (10.11 percent), New Hampshire (9.96 percent), Massachusetts (9.85 percent) and Connecticut (8.9 percent). The survey treats Washington D.C. as a state; houses in the nationÕs capital continued their strong appreciation performance, jumping by an average 11.03 percent.

Florida--red hot for the past two years--saw average resale values rise by 9.36 percent from October 2001 to October 2002. Individual metropolitan markets were also sizzling around the country, such as Long IslandÕs Nassau and Suffolk counties--up by nearly 15 percent in the past year. Miami houses jumped by an average 13.17 percent.

Though the hard-hit, high-tech employment centers in California cooled substantially during the past year, southern California markets continued to be hot. San Diego properties appreciated by an average 13.2 percent rate, and Los Angeles houses by 11.46 percent.

The national appreciation rate averaged 6.16 percent for the year, according to OFHEO. That is down a couple of percentage points from the peak reached two years ago, but still well above the historical average appreciation rates for the previous three decades.

What's happening in the markets that are now experiencing depreciation? Look to local economic factors--corporate layoffs in San Jose, and declines in manufacturing productivity in the Midwestern states. Overall, the housing appreciation picture remains strong. There will be corrections in markets that overheated and priced themselves out of reach of potential buyers--San Francisco, Austin, Denver, and the Salt Lake City area are good examples. All those corrections were predicted a year ago, and they have come to pass.

But as long as mortgage rates stay at or near multi-decade lows, don't expect any dramatic declines in appreciation rates nationwide. Your house is still performing better than any other investment you probably have, and thereÕs nothing in sight to change that fact.