Fannie-Freddie index: home prices up 5.1%.

Despite a-less than robust economy, home prices are on the rise, according to an index from Fannie Mae and Freddie Mac.

The Conventional Mortgage Home Price Index climbed during the second quarter indicating demand for homes is strong, according to economists.

Fannie Mae and Freddie Mac - officially known as the Federal National Mortgage Association and Federal Home Loan Mortgage Corp., respectively - said the index rose at an annualized rate of 5.1%. to 133.29, at the end of the quarter, up from 131.64 at the end of the first quarter.

'A Strong Number'

"It's not higher than I expected, but it's a strong number," said David W. Berson, vice president and chief economist at Fannie Mac. The index uses the first quarter of 1987 for the base of 100.

The index is calculated by comparing mortgages over time on the same home. The index uses actual sales prices or appraised values of the-same home over time to get a more accurate reading on home prices, according to a press release issued jointly by the agencies.

Mr. Berson said low interest rates last year, today's imporved economic growth, and a strengthening labor market are responsible for rising home values.

Rocky Mountain High

Rising interest rates are beginning to cool the housing market he said. "But it is cooling from a fiery past," he said.

Some of the hottest economic regions posted the largest rises in home values. The Rocky Mounlain region experienced the greatest price growth - an 18.6% annualized rate. Some regions in the Midwest also showed substantial improvements.

Mr. Berson was a bit disappointed with home-value growth in the South Atlantic-- Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, and Washington, D.C. - where home values rose at just a 1.1% annualized rate.

Virginia seemed to be "pulling the region down" with its shabby economy, he said.

The Pacific region provided the most promising hint of a trend. The region, dominated by California, showed an increase in home values.

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