The second-quarter report of the House Price Index (HPI) reveals another sign of a slowing housing market. Published by the Office of Federal Housing Enterprise Oversight (OFHEO), the report shows that house prices appreciated 1.17% — more than one percentage point lower than the previous quarter, and the lowest rate since the end of 1999.

Furthermore, the decline in appreciation over the past year is the largest since 1975, when the HPI was first published. “These data are a strong indication that the housing market is cooling in a very significant way,” OFHEO director James Lockhart said in a release announcing the latest HPI.

For a truly accurate picture of the situation, it's important to compare appreciation to historical levels, not just the last few years during the housing boom. In a June press release, National Association of Realtors chief economist David Lereah predicted an appreciation rate of 5.3% for the year, and commented that this was “a little above the high end of historic norms.” Indeed, the graph below shows the spike in home value in the last couple of years; data before that would show appreciation more in line with current rates.

And it doesn't appear that the value of home improvement projects has taken a hit, either.

Office of Federal Housing Enterprise Oversight