The froth is gone from most of the housing boom markets, but that doesn't mean that home prices are fizzling everywhere.

The latest quarterly federal survey of home price appreciation rates, issued last Wednesday, reported that prices are still increasing in dozens of metropolitan markets around the country -- and some are even experiencing double-digit appreciation rates.

The Office of Federal Housing Enterprise Oversight's home price index examines appreciation and depreciation trends in over 275 markets. Unlike sales price statistics compiled by the National Association of Realtors or the Commerce Department, OFHEO's data tracks the values of millions of existing properties whose mortgages were financed or securitized by mortgage giants Fannie Mae and Freddie Mac.

Overall, according to OFHEO, average home prices nationwide increased by 7.7 percent from the third quarter of last year to the third quarter of 2006. But most of those gains occurred in late 2005 and early 2006; the third quarter national price gain was just 0.86 percent or 3.45 percent annualized -- the slowest quarterly appreciation rate since early 1998.

Not surprisingly either, dozens of local markets and five states -- Michigan, Rhode Island, New York, New Hampshire, and Massachusetts -- registered net price depreciation on a quarterly basis. Some of the deepest declines in local markets were in the economically shell-shocked Midwest. Ann Arbor, Michigan, for example, saw a 2.02 percent loss in the third quarter alone -- an 8.08 percent loss if annualized. Detroit prices were down by 2 percent for the year and 1 percent in the third quarter. Boston prices dropped an average 0.4 percent, and San Francisco and San Diego prices decreased by 0.2 percent for the quarter. Sarasota, Florida, also saw net price depreciation of 1.2 percent during the third quarter.

But the flip side of the latest OFHEO numbers might baffle doom and gloom theorists who've long predicted a national housing crash or bust. Dozens of local areas have turned into -- or continue to be -- housing price hot spots. Bend, Oregon, for example, saw average home prices gain by 30.4 percent over the past year. Boise, Idaho, prices soared by 26.5 percent -- 4.2 percent in the third quarter alone. Katrina-ravaged Gulfport and Biloxi, Mississippi, are bouncing back with a vengeance -- a 23.3 percent average house price increase in the last 12 months and a torrid 7 percent for the third quarter.

Miami, touted as the likely epicenter of the housing bust by doomsayers, saw average price gains of 22.1 percent for the past year, and 3.7 percent for the third quarter. Salt Lake City is hot: a 20.4 percent annual gain and a 5.2 percent quarterly jump. Naples, Florida -- another high-cost boomtown expected to be in deep trouble by now -- saw an average gain of 19.9 percent for the year and 2.7 percent for the third quarter. El Paso, Texas, homes jumped 18.6 percent for the year and 4.6 percent during the quarter. Orlando continues to defy dire forecasts: Average housing prices were up 18.4 percent for the year and 1.6 percent for the quarter.

What's going on here? OFHEO says there's no question that prices are slowing and correcting downward on a national basis, but strong employment gains, favorable financing costs and strong local demand have created or sustained an impressive number of hot spots.

Patrick Lawler, chief economist of OFHEO, says, "The transition from sizzling markets to normal or weak markets" -- the correction phase of the housing cycle -- "has been orderly so far, and recent drops in interest rates lessen the likelihood that precipitous changes will occur."

The full OHEO Home Price Index survey is available here.

Published: December 4, 2006

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.