America's house prices are falling even faster than during the Great
There is something about Shiller I distrust and dislike (Yale Econ Prof). I cannot put my finger on it precisely. His index is a cap weighted index (like the S&P) and only counts resales.S&P/Case-Shiller Home Price Indices Methodology Houses that were never resold are not in the index. So if some guy dumps a house he just bought, it is in the index. If another guy buys a new house next door from a builder it is not. The methodology of what to include and how requires judgement and interpretation. It only uses sold houses for that period in the index for each region. So every 3 months (it is a 3 month average) an entirely different set of houses is in the the index. I am not sure what else could be done, but my point is the index's reflection of reality itself must be volatile. Additonally, further declines are already baked in the cake. If housing prices are flat for the next 2 quarters, we will see that headline each time. Amusingly, it will stop just when Obama swears in. This is because the trailing 4 quarters were near the high water mark.