Wyoming had a 6.3 percent gain in home-price appreciation from the first quarter of 2007 to the same period this year, according to the report released Thursday by a federal agency that tracks home values. Utah's gain was 5.6 percent, followed by Montana, at 4.9 percent.

A downturn in real estate markets throughout Utah has pushed home sales down and led to moderating home prices. Utah slipped to No. 2 after five consecutive quarters in the top spot, according to the House Price Index report by the Office of Federal Housing Enterprise Oversight.

Utah's high ranking can be attributed to deeper downturns elsewhere, such as California, down 10.6 percent; Nevada, down 10.3 percent; Florida, down 8.1 percent; and Arizona, down. 5.5 percent. Nationally, prices were down 3.1 percent in the year that ended March 31.

The report, issued quarterly, does show the deceleration in Utah's real estate market. When Utah first topped the nation in appreciation in the fourth quarter of 2006, its one-year appreciation topped 17 percent. By the third quarter of last year, appreciation had slowed to 12.9 percent before dipping even further in the fourth quarter of last year and first quarter of this year.

The question now is whether the Wasatch Front's real estate market will continue to see appreciation, albeit small increases, or if home prices will fall.

Several economists have predicted home-price declines along the Wasatch Front of as much as 20 percent from the fourth quarter of 2007 to 2009 or 2010. Realtors have suggested the market will simply level off without so much pain for homeowners.

"We're definitely in different times right now, and I think we've yet to see the worst of the softness in the market," said Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah, which tracks residential and commercial markets in Utah.

Wood believes the House Price Index probably understates the scope of the downturn in Utah. The report, based on data from Fannie Mae and Freddie Mac, includes more than 34 million sales transactions and appraisals ordered for refinancings. But it uses only conventional "conforming" mortgages, not the larger loans on more expensive properties in which sellers are having to cut prices the most to get them sold.

Adam Silver, who is trying to sell a home in Draper, said eight months ago his home appraised at $750,000, and he put it on the market for $720,000. He has since lowered the price to $680,000 and most recently to just under $620,000.

The nearly 5,300-square foot home is in an attractive area, is updated and sits on a large lot. "But there just doesn't seem to be any buyers," Silver lamented Thursday.

He has renters to help defray his mortgage, and if he can't get near the current asking price, he'll hold off until the market improves. "I just can't go much lower than this," he said.

Wood said one key gauge of a real estate market's health is how well new homes are selling. In Utah, home building activity plummeted last summer and remains poor, he said.

"It's very painful out there in terms of home building," Wood said. "Our home building numbers are just awful. In terms of the magnitude of the drop in building, it's the worst we've ever seen."

In the first quarter, only two of Utah's metro areas ranked in the top 10 in terms of appreciation nationally.

The Provo-Orem area was No. 6, with a 6.8 percent gain in home prices over the one-year period. Ogden-Clearfield was No. 9, with a 6.6 percent increase. The Logan area was No. 15, with a 6 percent increase. Salt Lake City, with a one-year gain of 5.4 percent, dropped out of the top 10 to No. 22 nationally. St. George is languishing at No. 235, with a 3.7 percent decline in home prices.

The report covers 292 metro areas, with Merced, Calif., ranking the worst, with a 24.7 percent decline in home values over the one-year period. California has been hit especially hard by the real estate downturn. Five of the 10 cities with the worst price declines are in California; the other five are in Florida, which also has seen a deep downturn.

David Mansell, president of the Utah Association of Realtors, said he doubts that the real estate downturn along the Wasatch Front or in Utah will be deep or long.

"The state's economy is good enough that we're going to maintain job growth and population growth to support the real estate market," he said.

He said Utah's market is suffering mainly from negative media reports nationally that make people fearful of buying.

"Everybody is whining about all this stuff," he said. "A lot of places are suffering. Yet our market is still doing pretty well."

lesley@sltrib.com