Economist: The Case-Shiller Home Price Report 'Makes No Sense'

We just got March S&P Case-Shiller home prices that beat expectations.

The numbers showed home prices were cooling, but they nevertheless reflected increases on month-over-month and year-over-year bases.

However, Ian Shepherdson chief economist at Pantheon Macroeconomics says "this report makes no sense." This is because "every indicator" of the house market he watches is slowing or falling.

"We don't know if the March problem is Easter seasonal adjustments or the long-standing issue of fully adjusting for changes in the proportion of foreclosure sales in the sample, but we think the real trend in existing home prices is now flat at best," Shepherdson writes.

Shepherdson has previously pointed out that foreclosure data skews the home price report.

"As foreclosed homes typically sell for much less than regular private sales, a decline in the proportion of foreclosure sales will raise reported prices," he wrote back in April. "The correlation between changes in the proportion of foreclosures and the rate of increase of Case-Shiller home prices is not perfect, but it is real, as our first chart shows."

This chart shows the difference between existing home prices and Case-Shiller home prices and why Shepherdson thinks the latest report makes no sense.