According to a new study, a growing percentage of U.S. housing markets are overvalued and at risk.

The study, based on government data, was released on Monday by Global Insight and National City.

In the first quarter of 2006, 71 housing markets were identified as "extremely overvalued" based on median sales prices, median income, population and historic values. The markets represent 39% of all housing in the country.

In the fourth quarter of 2005, only 36% of markets were overvalued. In the first quarter of 2004, only 1% of markets were overvalued.

Homes that are classified as "extremely overvalued" are those that show a value of 24% higher than normal.

Correction from overvalued prices usually occurs within three and a half years, according to the study. When prices fall from the overvalued level, they usually straighten out around 50% of the overvaluation.

The study used sales-price data from the Office of Federal Housing Enterprise Oversight. The recent data showed that single-family houses increased in price at a 7.3% annual rate for the first quarter. This marks the slowest price gain since 2003.

"Price appreciation is slowing, but it continues at a historically high rate, boosted by especially strong increases in already overvalued markets," explained Richard DeKaser, chief economist for National City.

He continued to say that the most overvalued markets are those with the highest price appreciation.

California and Florida had 17 of the top 20 overvalued markets. Homes in Naples were deemed to be 102% overvalued. Other overvalued markets include Santa Barbara and Riverside.

Not all markets in the report were overvalued. Out of 317 markets, 88 were undervalued, according to the report. College Station, Dallas, Fort Worth, Houston and San Antonio were all undervalued.

DeKaser said that the number of undervalued markets is steadily declining.