U.S. home prices rose in January for the first time in ten months. The increase amounted to 1.7 percent on a seasonally-adjusted basis January from the previous month according to the House Price Index report released Tuesday by the Federal Housing Finance Agency.

The index is still down 9.6 percent from their peak in April 2007. For a 12-month period ending January 2009, U.S. Home prices fell 6.3 percent.The government noted that sales in January were "relatively low," which could skew the result.

The FHFA monthly index computation is based on the purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac thus reflecting only mortgages backed by Fannie Mae and Freddie Mac. This excludes homes with jumbo mortgages and those backed by subprime loans. On Monday, the National Association of Realtors said the U.S. median home price was dropped to  $165,400 in February as a foreclosures continue to flood the market.

For the nine Census Divisions, seasonally-adjusted monthly price changes from December to January ranged from 0.9 percent decline in the Pacific Division which includes Hawaii, Alaska, Washington, Oregon and California, to 3.9 percent increase in the East North Central Division which includes Michigan, Wisconsin, Illinois, Indiana and Ohio.

The January home sales reflected in the FHFA data disproportionately occurred in areas with the strongest markets. While it is difficult to perfectly control for changing geographic mix in estimating house price indexes, the data suggest that if one were to remove those effects, the change in home prices in January, while still positive, would have been far less dramatic.

It also should be noted that sales volumes, in absolute terms, were relatively low in the month which could skew results. Accordingly, the estimation imprecision associated with the January estimate is relatively large and subsequent revisions to the monthly figure could be significant.