When you're in a long, slow recovery period in real estate, even the slightest hint of good news can be significant.

We saw that last week, when the controversial Standard & Poor's Case-Shiller home price index came out.

You may have seen the headlines or watched the gloomy news reports on TV: Prices were down again -- this time by nearly 16 percent year to year -- in 20 of the largest U.S. markets.

Now even if you accept the validity of that index as a measure of what's really going on in prices nationwide -- and we have always had serious doubts about it -- when you scratch below the surface of the latest monthly report, you find some surprisingly positive developments that got little or no media attention.

Number one: Prices in seven of Case-Shiller's top markets actually were UP for the month. They include Denver, Atlanta, Boston, Minneapolis, Charlotte, Portland and Dallas.

Number two: The month to month change for the entire index was a minus nine tenths of one percent. We all know the index is disproportionately weighted toward the most volatile, high-cost markets of the boom years, so when the monthly change is less than one percent, it begins to look like the curve is finally flattening out.

That's definitely positive news, especially coming from the most bearish source in the real estate marketplace.

In other economic developments affecting housing this week, recession fears were put off for still another quarter, as the U.S. economy continued to expand and defy the doomsayers. The Gross Domestic Product (or GDP) rose at a 1.9 percent rate in the second quarter, up from nine tenths of one percent in the first quarter.

Mortgage rates dropped to 6.46 percent for 30 year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen years rates slid below the 6 percent mark again, down from 6.1 percent last week. Both are lower than year ago levels.

The main negative at work at the moment is the unemployment rate, which jumped again last month and now stands at 5.7 percent. However, the Labor Department just revised its employment numbers upward by 26,000 for the prior two months. As a result, according to forecast economist Dr. Orawin Velz of the Mortgage Bankers Association, "the decline in employment in the past two months is less severe than originally reported."

Published: August 7, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.