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Last week, the Case-Shiller Index reported home values up 0.8 percent across 20 tracked markets. Then, the public-sector Federal Housing Finance Agency reached a similar conclusion.

They're both good news for housing, of course. But can we believe it?

Good Signs For Housing -- Values Are Rising

Reporting on a two-month lag, the government's Home Price Index shows home values up 0.8 percent in April, buoyed by the expiring federal home buyer tax credit and low mortgage rates.  It's a positive signal for a recovering housing market in Cincinnati and everywhere else.

But just because the Home Price Index says home values are rising, that doesn't mean they are. The Home Price Index methodology is flawed on multiple fronts.

The Flaws Of The Home Price Index Revealed

The biggest flaw is that the Home Price Index reports on a 60-day delay. A two-month lag like this turns the HPI into a trailing indicator for the housing market instead of a forward-looking one. If you're a home buyer looking for direction, HPI won't give it to you -- look to your real estate agent instead.

Second, HPI only accounts for home values in which the home's attached mortgage is backed by Fannie Mae or Freddie Mac.  Therefore, as the FHA market share grows, fewer homes are getting included in the HPI sample set, and HPI values may skew high or low.

And, lastly, the Home Price Index doesn't account for new home sales -- only repeat ones.  This, too, eliminates a major segment of the market.

The Home Price Index Is The Best Of What's Around

All of that said, though, the Home Price Index remains important to housing.  It's the most comprehensive, thorough home valuation model in print and that fact can't be ignored.  That, and the HPI has been giving strong readings since the start of year.

So here we are.  It's July. By now, the market's bottom has passed and sellers are regaining their negotiating power. However, homes remain relatively inexpensive and mortgage rates are absurdly low.

It's an excellent time to get off the fence and make that offer.

Get a free, no-obligation quote on a mortgage. or call me at 513-443-2020.  I answer my calls and answer all my own emails.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.