Weighing in on an earlier discussion surrounding OFHEO's HPI home price measure versus the S&P Case/Shiller index numbers, Freddie Mac's chief economist Frank Nothaft jumps into the debate with a simple "can't we all just get along?" message:
Each of [the different housing measures] has its own advantages and disadvantages, though, and a deeper look into the numbers reveals a clear message: home price appreciation has weakened sharply, but with significant differences across regions and metro markets.
Nothaft characterizes measures used by the NAR and the Commerce Dept. as useful for near-term price trending, but limited for longer term comparison because the measures are vulnerable to market shifts (i.e., more high-end homes sold one month versus the previous). Nothaft argues that the more complex measures (the Case/Shiller, HPI, and Freddie's own CMHPI) make an "apples-to-apples" comparison easier by using a repeat-sales methodology, but that each has its own separate drawbacks: the HPI measures don't capture movement outside of the conforming market, while the Case/Shiller numbers don't offer nearly as broad coverage. However you slice it, Nothaft says, the market messages and risks are clear:
The differences between the various house price measures ... should not overshadow the similarities. All show that national price growth has shifted down from the double-digit gains of 2004-2005 to something near zero, with several markets down from a year ago ... While a steady job market and growing national economy may help limit the downside risks to housing prices, several risks – the elevated levels of homes for sale, recent increases in mortgage rates, and rising foreclosures of subprime borrowers – point to continued weakness in the months ahead.