They're Up-They're Down-Are You Confused?

The OFHEO (Office of Federal Housing Enterprise Oversight) has released the report on second quarter home price appreciation. The aggregate result shows that home prices appreciated nationally by 3.2% from the same quarter in 2006. That's +3.2%.

I stressed that +3.2% because I just posted that the Case-Shiller Home Price Index dropped by 3.2% comparing the same two quarters. That's -3.2%. It doesn't take a mathematician to know there's a problem somewhere if you're relying on the wrong report to make decisions as an investor. So, some research was in order:

Here's the Case-Shiller report.

Here's the OFHEO report.

The OFHEO explains the differences.

Before you wade into all of these, the high points the OFHEO gives for the differences are:

Using urban areas, Case-Shiller's data doesn't cover 13 states.

Markets in those 13 states have on average been stronger than in the rest of the nation.

In another 29 states, Case-Shiller has incomplete data.

The incomplete data in the 29 states is mostly rural, where price performance has been better.

If the urban areas are matched, the differences between the two reports averages only 1.88%.

It would appear that OFHEO's report would be more reliable than Case-Shiller as a national composite, but that Case-Shiller is an excellent tool for the urban areas it covers. If anyone has the time and inclination, read the material at the three links and comment here on your interpretation.