September 7, 2006

Unseen Housing Headline: “Home-Price Growth Returning to Normal”

Here are some of the headlines actually used in coverage of Tuesday’s Office of Federal Housing Enterprise Oversight (OFHEO) report (PDF) showing a 1.17% increase in second-quarter home prices:

  • USA Today: “Growth in home prices show(s) sharp slowdown in 2Q”
  • Boston Globe: “Home prices show huge slowdown”
  • New York Times: “Home Prices Fall in Nearly One-Fourth of Metropolitan Regions”
  • Associated Press: “Home prices show sharp slowdown”
  • The “US Home Prices Inch Ahead”
  • (The winner, Domestic Division, for most obvious unbridled and uncalled-for pessimism, which appears to have the fingerprints of former CNN and Wall Street Journal uber-liberal Al Hunt all over it) Bloomberg: “US Home-Price Gains Slow as Housing Slump Deepens”
  • (The International winner for hare-brained hysteria) Toronto Globe and Mail: “The housing collapse heard round the world”
  • Newsday (using Bloomberg content): “Home price growth takes dive”

Enough already.

Here is context missing from the reporting. The table below shows quarterly, annualized quarterly, and previous four-quarter home price increases during the 1990s, before 2000′s bubble economy and the post-September 11, 2001 interest-rate declines sparked a few years of strong home-price growth followed by a two-year-plus price boom:


This information is included at pages 3 and 4 of the OFHEO report issued Tuesday. Any reporter wishing to cover the story professionally should have at least looked at this information.

A trained reporter should see at least these important points of historical context when reviewing it:

  1. The “in a slump” 1.17% increase in the second quarter of 2006 is over 60% greater than the 0.73% quarterly average during the entire decade of the 1990s!
  2. That 2nd quarter 2006 increase, if annualized to 4.68%, would be greater than the actual increase in home prices in every calendar year from 1990 to 1997.
  3. The decade of the 1990s had six quarters where national home price growth was actually negative, and NO four-quarter period where housing prices increased by more than 5.5%.

How many times was the national housing situation described as a “slump,” “taking a dive,” or in a “huge slowdown” during the 1990s (after the effects of the Fall 1990-Winter 1991 recession were shaken off)? Answer: Almost never, and perhaps never at all.

Oh, and since someone will surely ask — The average quarterly home-price apprecation during the eight Clinton budget years (October 1, 1993 through September 30, 2001) was 1.14%.

Cross-posted at


1 Comment

  1. [...] One post argues that while the froth has left the housing market, we have simply returned to historical price appreciation growth rates. [...]

    Pingback by Pundit Review » Blog Archive » Old and new media debate the housing bubble — September 7, 2006 @ 2:21 pm

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