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 Street.com: "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:

• First, 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!
• Second, 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.
• Third, 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 with minor changes at BizzyBlog.com, where you can also find a post ("Fun with Tom and Rex: A Discussion of the Housing Market Situation") chronicling an e-mail/blog comment exchange between MarketWatch reporter Rex Nutting and myself.

UPDATE: You simply must read the comment MarketWatch reporter Rex Nutting left here at BizzyBlog (Comment #2, in case you need to scroll) in the communication exchange post just mentioned. Mr. Nutting also e-mailed me a number of charts that he believes prove his points, but believe me, they only serve to prove mine. More to come tomorrow.