"Prices of existing homes drop 3.5% from 2005 By Noelle Knox, USA TODAY"

That's old news. USA Today and FinancialSense like to show hype; if what's really going on isn't hype then they make something up. People who want to justify what they've already decided to think love those guys.

OK, sure, I use their stuff sometimes, I use everyone's sources. I don't have the luxury of just reading only what agrees with what I've decided is true. I only make money when I know what's actually going on. That's why I check everyone out. Then I compare credibility. I kind of like the "the OFHEO's house price index" that came out with "Nationwide, on average, home prices this quarter are up". You can see their take for all regions --here's the numbers.

Please forgive the length of this post but you did ask If I "was sure". FreddieMac's got a slightly different take with the same conclusion as comes with the OFHEO stats:

Office of the Chief Economist

Conventional Mortgage Home Price Index

Q3 2006 Release

All Entries Are Percent Changes	New England	Middle Atlantic	South Atlantic	East South Central	West South Central	West North Central	East North Central	Mountain	Pacific	The United States

Quarterly Change
Q2 2006-Q3 2006	0.1	0.6	0.7	1.6	1.6	1.0	0.5	1.7	1.4	1.0

Annualized
Quarterly Change
Q2 2006-Q3 2006	0.3	2.5	2.9	6.4	6.7	4.0	2.2	7.1	5.7	4.0

Annual Change
Q3 2005-Q3 2006	3.7	8.8	9.5	7.7	8.0	4.1	3.1	10.8	11.7	7.9

5-Year Change
Q3 2001-Q3 2006	59.5	73.2	69.1	30.8	29.5	34.6	27.6	55.6	95.7	55.2

Annualized
5-Year Change
Q3 2001-Q3 2006	9.8	11.6	11.1	5.5	5.3	6.1	5.0	9.2	14.4	9.2

Send comments and questions to chief_economist@freddiemac.com

Although Freddie Mac attempts to provide reliable, useful information in this document, Freddie Mac does not
guarantee that the information is accurate, current or suitable for any particular purpose. Estimates contained in
this document are those of Freddie Mac currently and are subject to change without notice.
Information from this document may be used with proper attribution. Alteration of this document is strictly prohibited. © 2006 by Freddie Mac.

Something else that makes this stuff more convincing than USA Today is I can check how the numbers are figured:

1. What is the House Price Index?

It is a measure designed to capture changes in the value of single-family homes in the U.S. as a whole, in various regions of the country, and in the individual states and the District of Columbia . The HPI is published by the Office of Federal Housing Enterprise Oversight (OFHEO) using data provided by Fannie Mae and Freddie Mac. OFHEO began publishing the HPI in the fourth quarter of 1995.

CMHPI Data

Freddie Mac's Conventional Mortgage Home Price Index (CMHPI) provides a measure of typical price inflation for houses within the US. Values are calculated quarterly at three levels of geographical aggregation: Metropolitan Statistical Area (MSA), state, and Census Bureau division. A national index defined as a weighted average of the nine Census division indices is also available. The CMHPI is based on an ever expanding combined database that currently numbers more than 31.6 million.

The OFHEO has several deficiencies that skew housing market stats to the upside. They are as follows:

December 5, 2006

More on Housing Prices

By DAVID LEONHARDT

The broadest government measure of house prices is calculated by the Office of Federal Housing Enterprise Oversight, the agency that oversees Fannie Mae and Freddie Mac. The idea at the heart of the index is a good one. It tries to do the same sort of apples-to-apples analysis I described in this week's column, tracking individual houses over time to see how much their price has changed.

But it has three big weaknesses that end up making it much less useful than it could be. First, it excludes any mortgage over $417,000, because Fannie Mae and Freddie Mac — the two big mortgage buyers — don't own loans so large. Obviously, many mortgages on the coasts are bigger than that.

Second, the data for individual metropolitan areas includes not just house sales but also appraisals done for a mortgage refinancing. Appraisal values, as many people know, tend to be inflated.

Finally — and by necessity — the index includes only houses that have actually sold lately. In a falling market, with an enormous number of properties for sale, the houses that are selling tend to be more appealing than the average house.

"We're dependent on houses that are actually transacting," said Patrick Lawler, the chief economist at the oversight agency, which is known as Ofheo. "It's true that may not evenly reflect the market."

Right now, all these flaws seem to be making house values look much stronger than they really are. According to the latest index, for example, the average house in Miami would have sold for 22 percent more this summer than a year earlier. You won't find many house sellers in Miami who would agree that's true.

As Thomas Lawler, a housing economist (and no relation to Patrick Lawler), recently wrote in a report to clients, "Well, there's a growing view that this index...doesn't reflect what's really going on with home prices."....

http://www.nytimes.com/2006/12/05/business/06leonhardt-side.html?_r=4&adxnnl=1&oref=slogin&adxnnlx=1165806099-euJOV7toSE57h/SGKxu/yA&pagewanted=print

PS USA Today ran a number of editorials back in 2005 to the effect that there was NO HOUSING BUBBLE. Now they have no choice but to report on the housing bubble as the market itself forced them to cry uncle.