WASHINGTON -- House prices rose 0.85% in the first quarter this year, compared with the preceding quarter, according to a new index cmpiled by Fannie Mae and Freddie Mac.

The index is arrived at by looking at repeat sales transactions. Because they buy almost two-thirds of the mrtgages made, there's a good chance that a mortgage will end up with one of the two secondary market agencies when a house is sold.

By matching the sales price of the home to the price of the home to the price when it was last held by one of them, the agencies can track how the same house has changed in value.

Both have separately maintained such indexes. This is the first time they have pooled their data. Between them, they have repeat sales data on 4.5 million homes, said Bill Stephens, senior economist at the Federal Home Loan Mortgage Corp.

Analyzing Sales Data

In the first quarter, they looked at data from half a million repeat sales to arrive at the index, Mr. Stephens said.

Other housin indexes measure a change in average home values by looking at the priceof homes sold in each period. Such indexes are affected by the mix of homes being sold at any given time, Mr. Stephens said. But over about 10 years, all indexes even out and how similar numbers, he said.

The agencies developed their repeat sales index to get amore reliable measure of default probabilities in particular markets, said David Berson, chief economist at the Federal National Mortgage Association.

Regionally, the agency index shows that prices rose in most areas across the nation. But they were flat in New England and the Middle Atlantic, and down slightly on the West Coast.

The index also sows that nationally, home prices climbed 3.3% over the last four quarters and 16.2% over th last five years.

By contrast, the Federal Housing Finance Board's index showed that average home prices rose only 1.09% in the last four quarters.

The board's index also showed that house prices dropped 1.6% in the first quarter, compared the preceding quarter.

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