AGREE TO DISAGREE Tracking housing values is harder than tracking stocks. The Office of Federal Housing Enterprise Oversight’s index and the gloomier Standard & Poor’s Case/Shiller index track home prices with methods considered reliable, analysts say. Both look at repeat sales of the same houses over time, based on a concept developed in the 1980s by Karl Case of Wellesley College and Robert Shiller of Yale University. But OFHEO’s index says home prices rose nationally by 1.8 percent between the third quarters of 2006 and 2007; while the S&P/Case-Shiller national index of home prices was down 4.5 percent in the same period – a discrepancy that persists even though both barometers avoid distortions that occur in other widely cited measures, including the fluctuations caused by the sale of high-priced homes. What causes the discrepancy? The bottom line is economists can point to some differences, but overall they don’t know what causes the gap. And as some analysts have pointed out, with any luck, by the time they figure it out, we’ll be out of this slump and won’t care any more. Source: The Wall Street Journal, David Wessel (02/14/08) © Copyright 2008 INFORMATION, INC. Bethesda, MD (301) 215-4688

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