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Home Prices Fall And My Run-On Rant About It

I like the S&P/Case-Shiller report,

because it’s really the bones of the boom and the bust all wrapped up into two neat little pages. The report only looks at the top twenty metro markets, that is, the biggest cities in the U.S., where the real estate boom really took place.

“The pullback in the U.S. residential real estate market is showing no signs of slowing down,” says Robert J. Shiller. The year-over-year decline in the second quarter for the national index, 3.2%, is the lowest in history, or at least the history of the report, which dates back to 1987.

The trouble is that the report is for June, which is the end of the busiest housing season (and I know it wasn’t too busy this year), so it doesn’t reflect any of the issues in credit that took hold at the beginning of August.

And by the way, some of you have been giving me flack for being too pessimistic about the housing market, for saying yesterday that the July existing home sales numbers are worthless because they don’t reflect the mortgage issues that began in earnest in August, and for implying that nobody can get a mortgage. Hogwash.

Of course people can get mortgages and of course the bulk of potential homebuyers are not affected by the credit crunch. But many are, and media hype or not, home buying is one of the most emotional things you can do, next to getting married: so, consequently, uncertainty about the health of the credit and housing markets, is going to affect sales and prices, whether the fundamentals of supply and demand support those effects or not. How’s that for a run-on rant!

Questions? Comments? RealtyCheck@cnbc.com

  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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