The quarterly report on home prices issued by the government's Office for Housing Enterprise Oversight (OFHEO) is the most comprehensive and most reliable measure available of what is happening in the housing market.

Here is how today's OFHEO press release describing results for the third quarter of this year started off (bolds are in original):

For the first time in nearly thirteen years, U.S. home prices experienced a quarterly decline. The OFHEO House Price Index (HPI), which is based on data from sales and refinance transactions, was 0.4 percent lower in the third quarter than in the second quarter of 2007. This is similar to the quarterly decline of 0.3 percent (seasonally-adjusted) shown in the purchase-only index. The annual price change, comparing the third quarter of 2007 to the same period last year showed an increase of 1.8 percent, the lowest four-quarter increase since 1995. OFHEO’s purchase-only index, which is based solely on purchase price data, indicates the same rate of appreciation over the last year.

The full OFHEO report (PDF) is here.

The quarterly dip was the first since the fourth quarter of 1994. It was the worst quarterly drop since the fourth quarter of 1990, when prices fell 0.40%.

From 1995-2006, home prices nationally went up 117%, while inflation during that period was 36% (a complete historical inflation table is here). From 2002-2006, home prices went up 52%, vs. inflation of 15%.

In fact, I still say, "Bubble, schmubble." If gas prices come down 25 cents a gallon in the next week, that will be a drop of about 8% -- 20 times greater than the home-price drop just reported. I don't expect to see any reports of a gas-price "bubble" any time soon.

Even conceding that after inflation, the current quarter's 0.36% drop (rounded to -0.4% in the press release) represents about a 0.7% real decline (July - September inflation including food and energy was +0.3%), and that the latest four-quarter appreciation of 1.79% (rounded to +1.8% in the press release) is also less than inflation (3.5% during the period including food and energy), excuse me if I resist the urge to join the "Oh, the humanity" chorus.

The press release from OFHEO also makes these points that you won't see covered much in the business press:

• Home-price declines are not pervasive throughout the nation -- "Of the 287 cities on OFHEO’s list of “ranked” MSAs, 204 had positive four-quarter appreciation and 83 had price declines."
• In fact, the big problems are relatively limited in geographic scope -- "Seventeen of the 20 cities having the most depreciation were in Florida and California. The other three were in Michigan." Even in Cali, which otherwise had lots of negative numbers, four-quarter price changes in the three large metro areas of Los Angeles, San Francisco, and San Jose came in about even at -0.07%, +0.93%, and +0.64%, respectively.

Moderate Mainstream contended that "the (housing price) numbers, they be lyin'" several weeks ago. She has a point, as I don't doubt that most cities reporting overall steady prices have at least a few neighborhoods experiencing declines. I don't doubt for a minute that there is more than a little suffering going on as a result of it. I also happen to believe that the so-called "Bankruptcy Reform" law passed in 2005 may be making the problem worse. It would not surprise me if many of those who might have been able to hang on to their homes under the old bankruptcy regime are losing them to foreclosure today. Perhaps unlike many readers, if more people are losing their homes as a side-effect of "bankruptcy reform," I do not consider that a desirable result.

But today's OFHEO report tells me that the housing market can and will, if left alone, mostly work itself out of its current difficulties; Moderate Mainstream essentially agrees. The situation surely is not one that calls for the massive, litigation-creating rewrite of mortgage lending law that Barney Frank and others in Congress are proposing.

The results today also don't support the contentions of mass criminality asserted or implied by the likes of New York Attorney General Andrew Cuomo and Ohio Attorney General Marc Dann. Yet, so far, there appears to be little media skepticism over Cuomo's or Dann's motives, which appear to be more about creating a recession, or the appearance of a recession, than they are about fixing whatever legitimate problems there are in housing and mortgage lending.

I expect Old Media coverage of the OFHEO report to be light, and not to be seen outside of the business pages and posts. Though it's the best and most comprehensive info available, the reported decline isn't big enough for Old Media's taste, and won't sufficiently promote their apparent agenda of talking down the economy. It's much better to treat the relatively narrow (but well-done within its scope) Case-Schiller report as the gospel, and to pretend OFHEO's number don't exist.

Cross-posted at BizzyBlog.com.

—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters