Reading the headlines about the latest Case Shiller report on home prices is a little like looking at one of those two-sided optical illusions.

NPR and the New York Times say home prices are up. The Wall Street Journal's MarketWatch and Chicago Sun-Times say home prices are down.

Here's the real picture: Home prices fell slightly in December, according to the latest Case Shiller Home Price Index, released today by credit agency Standard & Poor's. But they fell less than you would expect for a cold weather month, since few people are normally out buying homes in the weeks before Christmas. When the index is adjusted for the season, prices look ever so slightly higher.

And that's great news, since every month that passes without massive fluctuations in the housing market is a step closer to stability.
The seasonally-adjusted Case Shiller Home Price Index hit 145.87 in December, up from 145.4 in November. The seasonal adjusted Case Shiller index has risen steadily for the last seven months, starting its slow rise from 140.83 in May.

That shows that the housing market is continuing to solidify, shaking off some of the frenetic activity of the housing boom and the bust that followed. "The pace of deterioration has stabilized for now," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.

However, take away the seasonal adjustment and the Case Shiller Index fell to 145.9 in December from 146.25 in November. The unadjusted Case Shiller has been falling since September from 146.71.