Assisted by low interest rates that created demand from buyers, prices for single-family homes that can be purchased with "conforming" mortgages rose more than 9 percent nationwide in the second quarter compared with a year earlier, the steepest increase in 25 years, according to a government report released Wednesday.

Among metropolitan areas that saw the greatest run-up in prices of such homes in the second quarter, 13 of the top 20 were in California, but the San Jose area, where most houses are too expensive for conforming loans, ranked 124th. Las Vegas was first, with nearly 25 percent price appreciation.

"These data show no signs of the long-anticipated, and ultimately inevitable, slowing of house-price inflation," said chief economist Patrick Lawler of the Office of Federal Housing Enterprise Oversight. His comments were included in a statement that accompanied the agency's quarterly home price index.

Lawler said prices have become \\"increasingly vulnerable\\" to sustained increases in mortgage interest rates, which economists have been forecasting and which will likely dampen interest in home buying.

The federal agency, known as OFHEO, oversees the activities of Fannie Mae and Freddie Mac, the nation's two largest sources of mortgage financing. The price index uses data from the two companies' mortgage databases to gauge average changes in home prices based on the resale or refinancing of the same single-family properties.

The Salinas, Modesto and Sacramento areas all posted price appreciation from 17 percent to 18 percent compared with the second quarter of 2003. Fresno ranked third in the nation for price appreciation with a 23 percent increase.

According to the survey, prices in the San Jose area, which includes all of Santa Clara County, rose 6.2 percent.

But Lawler said that the survey has poor coverage of expensive markets such as Santa Clara County. That's because OFHEO only studies single-family houses with conforming mortgages -- those of up to $333,700 that are purchased on the secondary market by Fannie Mae and Freddie Mac. Those criteria leave out a huge chunk of the home sales in Santa Clara County, where many buyers take out loans of more than $333,700, known as "jumbo" loans.

"Most of the time the prices of houses of different quality levels are going to move similarly, but at times high-priced houses will move differently from the rest of the market, and we miss that, unfortunately," Lawler said.

Indeed, the OFHEO data differs greatly from what\\'s available from the California Association of Realtors, which measures resales of single-family houses that were listed on multiple listing services.

That group's second-quarter figures showed yearly price appreciation of 14.6 percent for Santa Clara County in the second quarter.

But Rod Aluisi, who owns a realty brokerage in Fresno, said the 23 percent figure for his city seems accurate.

"We have had great appreciation and we expect it to continue because we are still below a lot of California" in home prices, he said. For example, he is currently listing a four-bedroom home in one of Fresno's most sought-after neighborhoods and school districts for $370,000, far less than a comparable home in San Jose would bring. Unfortunately, he said, real estate investors are helping drive Fresno prices out of reach for some local buyers.

"They are putting a lot of our young families out of the market," he said. "There are a lot of investors coming from your area and from other parts of California."

Article © Anywhere Communications All Rights Reserved