More bad news for housing

So the markets sold off today on the news that housing prices are dropping, and fast. I was happy to see that the data discussed today was the Case-Schiller Home Price Index, because after reading about many methodologies, I think that this is the best methodology out there. This past weekend I read the entire methodology document and I came across the following nugget of information:

The monthly indices use a three-month moving average algorithm. Home sales pairs are accumulated in rolling three-month periods, on which the repeat sales methodology is applied. The index point for each reporting month is based on sales pairs found for that month and the preceding two months. For example, the December 2005 index point is based on repeat sales data for October, November and December of 2005. This averaging methodology is used to offset delays that can occur in the flow of sales price data from county deed recorders and to keep sample sizes large enough to create meaningful price change averages.

YIKES... This methodology means that in times of fairly rapid movement the index can really get behind the actual changes since it is a moving average. I know there is a futures market based on this methodology... next step is to delve into that market and understand where people are putting their money. If I was a betting man I would say that the year-over-year declines are going to accelerate in a significant way over the coming months.