The migratory trend toward more affordable housing continued in the nation during the third quarter this year, as home price appreciation slowed to nearly half the cycle's peak rate several years ago.

Western states -- but not California nor Nevada -- dominated the Top 10 list of states with the most home price appreciation over the past year, with Bend, OR, as the price appreciation leader among metro areas.

Nationwide, for the year ending in the third quarter, home prices appreciated 7.73 percent, almost half the 13.9 percent pace during the peak, spring 2004 period, according to the Office of Federal Housing Enterprise Oversight's (OFHEO) Home Price Index.

Despite the deceleration, home prices grew faster over the past year than non-housing goods and services in the Consumer Price Index (CPI). CPI prices rose only 3.1 percent.

Still, with a paltry 0.86 percent quarterly increase in home prices, which calculates out to an annualized rate of only 3.45 percent -- the lowest since the second quarter of 1998 -- there wasn't nearly enough appreciation to prompt the feds to raise the conforming loan limit for 2007. It will remain at 2006's level, $417,000.

The last time the conforming loan level remained unmoved was during the 1993 to 1995 period, when the level remained at $203,150, according to Eileen B. Fitzpatrick, spokeswoman for Freddie Mac.

The 1993 to 1995 period followed a major housing market dive, which began earlier in the 1990s, after the mid- to late-1980s boom.

"Our newest data confirm last quarter's data that the housing market is in a decidedly different stage," said OFHEO Director James B. Lockhart.

"With U.S. house prices growing less than one percent during the third quarter, it provides more evidence that the long-forecasted national deceleration in house prices is occurring. There are still some areas where appreciation rates remain very high, but now they are the exception rather than the norm," Lockhart said.

In the third quarter this year, the Top 10 appreciating states, began with Idaho, Utah and Oregon, all moving up several notches, with Utah moving most, from No. 10 to No. 2. No. 4 Arizona slipped from first place. Washington slipped one spot to No. 5. Florida and Hawaii fell most, four spots each, to No. 6 and to No. 9, respectively. Wyoming moved from No. 13 to No. 7. New Mexico moved up a notch to No. 9 and Maryland fell from No. 7 to No. 10.

The rate of appreciation for the Top Ten ranged from 13.19 percent to 17.52 percent for Idaho.

The OFHEO's Top 10 list reflects RealtyTimes' early-spring coverage this year of a migratory shift in home buying patterns away from some east and west coastal regions, to inland markets when buyers began to look for more affordable housing.

OFHEO said Michigan, Ohio, Massachusetts, Indiana, Nebraska, Minnesota, Iowa, New Hampshire, Colorado and Kentucky were at the bottom of the home price appreciation list with rates of appreciation ranging from minus 0.55 percent to plus 4.14 percent for the year ending in the third quarter.

Home price appreciation was evenly divided with 25 states and Washington, D.C., with annual appreciation rates above the national average and 25 states with appreciation rates below the national average.

The Top Ten cities all had appreciation rates greater than 20 percent. After Bend, Boise City-Nampa, ID; Gulfport-Biloxi, MS; Miami-Miami Beach-Kendall, FL, and Wenatchee, WA, rounded out the top five "ranked" metro areas.

Other OFHEO findings included:

• The quarterly appreciation rate fell in seven of the nine Census Divisions. The West North Central and East North Central divisions had small increases over weak second quarters.

• Five states -- New York, Rhode Island, Michigan, New Hampshire, and Massachusetts -- saw price declines from the second to the third quarter of the year.

• Michigan was the first state to show a year-over-year decline in more than six years. Prices fell in Michigan 0.6 percent between the third quarter of 2005 and the third quarter of 2006.

• Idaho now tops all states with the highest four-quarter appreciation rate with prices 17.5 percent higher in the third quarter of 2006 than they were a year earlier. Other states with still large year-over-year increases were Utah (17.4 percent), Oregon (16.9 percent), and Arizona (16.4 percent).

• Quarterly price declines occurred in more than half the cities in California. Fifteen of 25 California cities in OFHEO's list of ranked metros and divisions experienced price declines relative to the second quarter.

"The transition from sizzling markets to normal or weak markets has been orderly so far, and recent drops in interest rates lessen the likelihood that precipitous changes will occur," Lockhart said.