You may have seen the latest home sales and price numbers and wondered: What's going on here? Are we up? Are we down?

Depending on which TV network reported the news last week, it sounded either like real estate is continuing along its steady road to recovery - -or that we just hit a pothole in the road.

One major business news channel reported it this way: "Home sales down 14 percent in the first quarter." Other media reported an 11 percent GAIN.

So what is it?

Well, dig down into the actual numbers from the National Association of Realtors and you find that, yes, 2010 first quarter home sales were 14 percent lower than they were in the final quarter of 2009.

Home sales nationwide, however, in the first quarter of 2010 were 11.4 percent higher than they were during the same quarter the year before. And any economist will tell you: year to year comparisons are more meaningful than quarter to quarter data, which tend to be more volatile.

Lawrence Yun, chief economist for the National Association of Realtors, pointed out that sales in the fourth quarter of last year were unusually high because of a surge of closings related to the original expiration date of the housing tax credit.

We can probably expect a similar surge to show up some time in the coming two quarters caused by sales closings before the June 30 termination date of the credit program.

The 11 percent year over year gain is a much more reliable gauge of where the market really is, says Yun -- and that's a very healthy trajectory because consumers have more confidence in the economy, are spending more, and mortgage rates remain near all-time lows.

Gains in prices year over year in local markets are especially encouraging: Of the 152 metropolitan statistical areas surveyed by the National Association of Realtors, median prices in 91 were higher than the year before. Though most of the gains were in single digits, 29 markets saw median price increases in double digits.

Economists say the price and sales gains reflect the improvements underway in the overall US economy. The latest federal employment numbers saw a 290,000 net job increase in March, plus a drop in new filings for unemployment insurance claims.

Manufacturing jobs are expanding again, after years of declines, and the Gross Domestic Product (or GDP) is up by more than 3 percent.

In the words of Freddie Mac's chief economist, Frank Nothaft, "the underlying fundamentals for housing markets are improving rapidly" -- and should continue to do so through 2010.

Published: May 17, 2010

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.