A new study, [House Prices in America: Valuation Methodology & Findings](http://www.globalinsight.com/Highlight/HighlightDetail2350.htm) analyzes 299 metropolitan areas each quarter as a joint effort between National City and Global Insight.

The factors considered in this analysis are “population density, relative income levels, interest rates, and historically observed market premiums or discounts. Markets with valuation premiums above 30 percent were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 63 known local market price declines observed since 1985.”

The report shows that 65 of these areas or 38% of the US housing market are extremely overvalued. This is down from 67 markets in the prior quarter.

>”The slower pace of price appreciation, in combination
> with more recent evidence since the third quarter,
>suggests that a return to normal valuations lies
>ahead,” stated Philip Hopkins, managing director
> of U.S. Regional Services at Global Insight.

This is yet another housing market price index. Since it is based on observed market declines since 1985, I wonder if the unprecedented phenomenon of low mortgage rates this time around would skew or affect the observations?

[Download the full report [pdf]](http://www.globalinsight.com/publicDownload/genericContent/3Q2005report.pdf)

[Study: More housing markets called overvalued [USA Today]](http://www.usatoday.com/money/economy/housing/2005-12-08-overvalued-housing_x.htm)[U.S. Housing Still Overvalued [Forbes.com]](http://www.forbes.com/finance/2005/12/09/hovnanian-tollbrothers-nationalcity-cx_jw_1209housing.html)[Fewer extremely overvalued US homes–study [Reuters]](http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-12-09T182142Z_01_N09175602_RTRIDST_0_ECONOMY-HOUSING.XML)