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Why Home Price Reports Are Irrelevant

Seriously. I have reported five home price surveys in less than a week:

  • Clear Capital: Home prices fell 5.9 percent in past two months through 10/22
  • CoreLogic: Home prices fell 1.5 percent year-over-year in August
  • Natl. Assoc. of Realtors: Home Prices fell 2.2 percent year-over-year in September
  • S&P/Case-Shiller: Home prices rose 1.7 percent in the top 20 markets year-over-year in August, but with gains "decelerating"
  • FHFA: Home prices on homes with Fannie/Freddie loans fell 2.4 percent year-over-year in August

Three out of five of these reports are for August, when the bulk of the home buyer tax credit was over, but the closing deadline was then extended to Sept. 30th.

Home prices continuing to drop.
AP
Home prices continuing to drop.

One of them, the S&P/Case-Shiller, is a running average, so it goes even further back than August. One claims to be the most recent data, Clear Capital, and is the biggest drop, so you could suspect that's the tax credit hangover.

Then the NAR report, which measures September, so still under the influence of those last minute tax credit laggards, is somewhere in the middle but showing prices declining year-over-year for the first time in several months.

None of these reports show any of the impact of robogate/foreclosure gate/foreclosure freeze-out, whatever you choose to call it. With distressed properties running at 35 percent of all sales and foreclosures being more than two-third of those, the foreclosure freeze will negate a huge portion of the current data in the coming months.

Sure, it could even produce a momentary bump up in prices because you're removing all those bank-owned, discounted homes. I'm not sure I buy that theory.

"With distressed properties running at 35% of all sales and foreclosures being more than 2/3 of those, the foreclosure freeze will negate a huge portion of the current data in the coming months."

First of all, fall/winter is the slowest season in housing, and prices reflect that. Of course there are all those "seasonal adjustments," but with so much demand pulled forward by the tax credit, and foreclosure/mortgage issues plaguing what scintilla of buyer confidence remained in the market, sales are likely to take a deep hit again.

We are already selling homes at the third worst pace on record, and that was including a 10 percent monthly bump up from August to September.

If sales plunge, inventories rise, and when inventories rise, prices fall.

Do they fall everywhere? No. Is all real estate local? Yes. And that's especially why I can't stand these "national" home price reports. And yes, I recognize the contradiction ... that I will continue to report these price surveys on TV several times over. It's a living.

Questions? Comments? RealtyCheck@cnbc.comAnd follow me on Twitter @Diana_Olick