NEW YORK (CNNMoney.com) -- New evidence of a housing market slowdown emerged Tuesday - growth in the price of a single family home was just 1.17 percent in the second quarter, a decline of more than one percentage point from the prior quarter when prices grew 2.20 percent.

The Office of Federal Housing Enterprise Oversight (OFHEO), which released the report, said it was the slowest quarterly increase since the fourth quarter of 1999 and was the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975.

The year-over-year price gain was 10.06 percent.

OFHEO's numbers are generally regarded as the most accurate gauge of housing prices. Instead of measuring the average sale prices of homes, it compares repeat sale prices of the same single family homes.

Even so, according to Jonathan Miller of Miller Samuel, an appraiser in New York, the slowdown may be even more pronounced than the numbers are showing.

"The index may not reflect what's really happening out there," he said.

Miller thinks that many sellers are holding out for unrealistically high asking prices, and the buyers actually purchasing homes are only the ones willing to pay those higher prices. "That's why there's been such a drop-off in volume," says Miller.

In a normal market those sellers would more readily accept lower bids but, conditioned to oversized price increases, they are reluctant to abandon their asking prices.

To close deals with the on-the-fence or reluctant buyers, sellers will have to drop their prices and only then will the index reflect the actual market. The effect could snowball if sellers get a bit panicky and try to unload their properties quickly, before prices erode further.

The release from OFHEO said that appreciation in many states declined dramatically and the largest effects were felt in states that had experienced the greatest increases in recent years, such as Arizona and Florida.

"Of the seven states that saw more than 80 percent appreciation over the 2001-2005 period," read the report, "only Rhode Island's appreciation rate has increased over the last year. The remaining markets experienced rapid decelerations."

Conversely, states where prices appreciated more modestly over the past few years experienced more modest pullbacks this quarter.

In Arizona, the average home sold for 2.94 percent more than during the first quarter. That was after five years of rapid growth during which prices nearly doubled.

Florida prices, which spiked nearly 113 percent over the past five years, rose just 2.51 percent.

Michigan was the worst performing state during the quarter. Prices fell 0.72 percent. Other losers include Massachusetts (down 0.44 percent ) and Maine (down 0.20 percent).

The number one gainer among metro areas was Bend, Oregon, where the median price rose 7.37 percent for the quarter and 36.65 percent in the past 12 months.

The biggest fall was endured by Columbus, Indiana, where prices declined 3.55 percent for the quarter. Ann Arbor, Michigan prices fell 1.28 percent for the year, the most of any metro area.

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• Are you feeling the housing slowdown? Tell us how for an upcoming feature on how real people are being affected. Send emails to yourhome@money.com.