The Atlanta housing market consistently showed weakening results in recent home price and foreclosure reports, while similar markets began to show signs of stabilizing, if not rising, toward a full recovery.

This quizzical outlier left some economists wondering what may be happening there. When Mark Fleming, chief economist at the data firm CoreLogic (CLGX), took a question from an Atlanta real estate broker at REO Expo in June, he paused and said, "We need to talk after the presentation. Atlanta is a curious case. We need to figure out what's going on."

The latest Standard & Poor's/Case-Shiller index showed yearly price increases in half of the 20 metro areas covered in April. The 5.6% annual decline in Chicago was the second largest annual drop. In Atlanta, though, prices fell 17% from one year earlier.

More than 9,600 Atlanta properties had at least one foreclosure filing in May, up 33% from the month before and 28% above levels seen one year prior, according to RealtyTrac. It was the second largest monthly increase behind only New York.

For the first time since 2006, Georgia now holds the highest foreclosure rate in the country. It leapfrogged more famously hard-hit states like Nevada and Florida.

But the Atlanta mystery may not be so much about its decline, only the timing of it, according to local economists.

"So much of the local economy involved construction. But if you look at the latest data, you do see some job growth, there are fewer bank failures. I hope it comes back. But Atlanta will lag behind other cities during the recovery," said Roger Tutterow, an economist at Mercer University in Atlanta.

Atlanta hit its peak on the S&P/Case-Shiller in July 2007 and since dropped 38% as of April.

Peak-to-trough declines in other areas merely happened sooner.

The 55% drop in Phoenix and the 60% fall in Las Vegas occurred almost simultaneously from their peaks in the summer of 2006 through September 2011.

"The story about Atlanta is about migration," said Domonic Purviance, real estate market analyst at the Federal Reserve Bank of Atlanta.

During the housing boom, homeowners sold properties in New York and New Jersey to take mostly construction or finance jobs in Atlanta, Purviance explained. Employment in those sectors remains one of the worst in the country, stalling a recovery there. Other transitory areas such as Dallas or Phoenix, have much broader economies. People move there for a wider range of jobs.

"It was a real estate driven migration," Purviance said. "When the housing market tanked, you really saw things go bad."

There are signs of improvement. A post-crisis cascade of bank failures in Georgia slowed this year. The unemployment rate in Atlanta fell to 8.6% in May from 9.5% one year before. With new jobs leaking back into the market, the rate trended closer toward the national average of 8%.

The one thing Atlanta has in common with the rest of the housing market, is its hazy future.

"It's hard to speculate because Atlanta will be so dependent on real estate and construction," Purviance said. "If the tide rises and brings all ships up, Atlanta is going to be delayed, compared to other ships being lifted."