Qwest Communications, the local phone service provider, joined the ranks of U.S. homeowners hurt by falling prices after losing $1.8 million on the sale of its top executive's old house.

Qwest agreed to buy Edward Mueller's San Francisco-area home for $8.9 million in September so he could relocate closer to the company's Denver headquarters, according to a regulatory filing Friday with the Securities and Exchange Commission (SEC). Qwest sold the house three months later for $7.1 million.

The company hired Mueller in August to replace Richard Notebaert, who retired after almost halving the company's $26 billion in debt. Qwest also has debt to blame for the loss on the home sale, as surging mortgage defaults last year triggered a slump in housing prices.

U.S. home prices dropped in 21 cities in January, as banks sold foreclosed houses, increasing supply in the market. San Francisco prices declined 13 percent from a year earlier, the eighth-worst decline among the cities in a report Thursday by Radar Logic Inc., a real estate data company.

In Friday's filing, Qwest reported 2007 compensation for Mueller of about $5.63 million under SEC guidelines. The amount included the loss that Qwest took on Mueller's home.

Qwest spokeswoman Diane Reberger said the company had no further comment beyond the disclosure in its filing.

BLOOMBERG NEWS