U.S. home prices dropped once again in the first quarter, but by a smaller amount than in the previous quarter, a government agency reported Wednesday.

U.S. home prices fell a seasonally adjusted 0.5% in the first quarter of 2009, compared with a 3.3% decline in the fourth quarter of 2008. Sales prices fell a seasonally adjusted 7.1% from the first quarter of 2008 to the first quarter of 2009, the Federal Housing Finance Agency said.

The FHFA tracks U.S. home prices through its purchase-only home price index. The index reflects the sales prices of home purchases financed with Fannie Mae (FNM) and Freddie Mac (FRE) mortgages.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com