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Home prices drop at record rate in national index

Recession is more likely than not, says economist

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Economist Robert J. Shiller sees warning signs in a national home-price index that dropped at a record rate in the third quarter. "We are in the aftermath of the biggest housing boom in history," said Shiller, a Yale University economics professor, in a presentation today. "We're out of the range of normal variation in data. I take that as very significant. I think there is a significant chance of recession -- of probably over 50 percent at this point. "Most economists are still optimistic that there are a lot of signs of strength. I'm going out on a limb when I say I'm worried about a recession," but he said he is definitely not alone. "More and more people are going out on a limb now." The Standard & Poor's/Case-Shiller U.S. National Home Price Index, a quarterly gauge of changes in national home prices that is based on repeat sales of the same homes over time, dropped 4.5 percent in the third quarter compared to third-quarter 2006 and fell 1.7 percent compared to sec...