New data from the Office of Federal Housing Enterprise Oversight (OFHEO) suggests that housing prices are leveling off, contradicting the National Association of REALTORS (NAR) third quarter metro area price report hat stated that housing sales are "sizzling."

At least that's the way the financial media would like the story told, judging from the tone of some reports that hint that the NAR's results lean to the "bullish" side.

That has Walter Molony, spokesperson for the NAR seeing red. He says the NAR has no reason to compromise its credibility by telling people what they want to hear.

"We’ve never sugar-coated the facts," says Molony. In fact, he says, the two indexes, while appearing similar, don't track the same data, but results can often trend the same.

The OFHEO is a federal agency that regulates Fannie Mae and Freddie Mac for "financial safety and soundness." It derives its housing index data from single-family homes purchased with mortgages under $300,700 through Fannie and Freddie Mac. This index not only excludes homes purchased with jumbo loans, but those purchased with cash. Also excluded are properties such as apartments or condominiums because these price ranges and properties don't fall under conventional loan guidelines.

The purpose of the OFHEO's housing price indexes, according the bureau's press release, is to "analyze housing appreciation trends." The Housing Price Index Third Quarter 2002 report shows that average U.S. home prices increased 6.16 percent from third quarter 2001 through third quarter 2002, but that for the third quarter, housing appreciation slowed to .84 percent from 2.39 last quarter.

Housing prices indexed by the NAR are calculated by the median price of homes sold during the period in specific areas. The NAR contends that its housing price index tracks the sales of homes. For the same third-quarter period, the NAR said that metro housing prices from July through September rose 7.2 percent from the third quarter of 2002, up from the third quarter of 2001 when the median price was $150,900. This was enough to establish a new national median price for an existing, single-family home to $161,800. This is the highest median ever, says the NAR. The report also said that 33 areas posted double-digit annual increases in median existing-home prices and only seven areas posted generally minor declines.

There are parallels in both reports showing a slowdown in prices, but there are different methodologies in measuring appreciation.

The government report is a repeat sale index which means the data comes from the same properties being sold over time.

"They have a database of homes that are Freddie Mac and Fannie Mae loans," explains Molony, "and they look the homes each time one is resold or refinanced. They look at those same homes change in value. It gives you a hard appreciation number for those homes, whereas our number reflects everything that has been sold. The differences are more obvious at the metropolitan level, when we look at the metro level, we look at it quarterly.

"There are strengths and weaknesses to different methodologies," he continues. "Our price data is different in that it is the midpoint between where half of the homes sell for more, and half sell for less. The median price, over time, is a good gauge, but it can be periodically skewed. If you have inventory problems, such as there were in the upper price ranges in 2000 and 2001, where you had inventory shortfalls in the higher price ranges, and there was a churn in the higher-priced properties, the median price can be skewed. Or, if you have a lot of first-time buyers that will skew the data, basically because you are measuring the mix of homes. Any change in the composition is not going to give you an apples-to-apples comparison."

"The repeat sales index is a better gauge over time," allows Moloney, "but we are reporting median prices which is a good representative number, but it is not the same number. We are seeing a slowing of price increases which is good for the market long term. We have been skewed toward sellers, and if you do that too long, you start to price first-time buyers out of the market and then that knocks out move-up buyers."

While the stock market tumbled over the last couple of years, the financial press has begun to beat a drum that a "housing bubble" is next in line to burst.

"The whole price bubble story came back because of the financial press," admonishes Moloney. "I have to tell you that in my opinion, these financial publications have an interest in supporting the equities market.

"You might have local markets that have price corrections," he explains. "Those peaks and valleys smooth out over home ownership. If you buy at the top and something happens and the market stalls out, then it may slow and seven years later you can sell at a profit. You aren’t realizing the loss if you are living in your house. The ones who are hurt are the ones buying at the top and then they have a job change.

"Statistically, it is insignificant, but it isn't insignificant when it is happening to you."

Published: December 6, 2002

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.