UPDATE: US Home Prices Fell 1.8% In Nov, Government Agency Reports

U.S. home prices fell a seasonally-adjusted 1.8% from October to November, a government agency reported Thursday.

The decline was the steepest monthly drop, on a seasonally adjusted basis, in the Federal Housing Finance Agency index's 18-year history. Overall, home prices have declined 10.5% from their April 2007 peak, the agency said.

Home prices fell across all nine regions of the U.S., pushed down by sales of properties seized by banks and mortgage finance companies Fannie Mae (FNM) and Freddie Mac (FRE). They plunged along the west coast and the Rocky Mountain region, but they also fell sharply in Midwest states such as Kansas, Iowa and South Dakata not associated with the housing boom and bust.

The inclusion of sales of foreclosed properties may be creating an exaggerated picture of price declines, economists say, because such homes are often not as well maintained as owner-occupied homes.

The impact of such sales has been "a growing problem in all house price measures," Federal Housing Finance Agency senior economist Andrew Leventis said. "To some extent, those homes have seen greater quality degredation."

The index tracks only sales of single-family homes purchased with mortgages bought by Fannie Mae or Freddie Mac.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; [e-mail]

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