OFHEO: This index is looking at Freddie Mac and Fannie Mae data. It is measuring only the loans that fit into the parameters of those two institutions loan programs. They do not include mortgages too large or risky to be purchased or guaranteed by Fannie Mae and Freddie Mac. It is a national purchase-only house-price index. Still, it is giving us some good news. The index showed prices falling a seasonally adjusted 1.4 percent during the second quarter, compared with 1.7 percent in the first quarter. The all-transactions index shows the five states with the steepest declines were California (-15.8 percent), Nevada (-14.1 percent), Florida (-12.4 percent), Arizona (-9.2 percent), and Rhode Island (-4.8 percent).
Case Schiller Index: S&P/Case-Shiller Home Price Indices use the “repeat sales method” of measuring homes. The index shows real price changes by tracking the same homes as they sell. This methodology is recognized as the most reliable means to measure housing price movements , its even used by the OFHEO. According to Case-Schiller, US house prices were down a record 15.4% in the April to June quarter compared with a year ago. By adding back jumbo loans mostly in the higher priced markets and risky loans we get a very different picture. There may have been a slight decline in segments with less risk, but the whole picture still is dismal. The amount of risk this industry took on is more clearly shown by looking at these two methodologies.
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