With the collapse of house prices that started in 2006, the American Dream has become a nightmare for many of the 75 million Americans who own a home (CBS Evening News, February 2 , 2010). However, the drop in house prices has not been uniform across the country. The accompanying table represents median home prices (in $1,000s) by region for 2007,2008, and 2009.

Region 2007 2008 2009 Northeast 288.1 271.5 240.7 Midwest 161.4 150.5 142.5 South 178.8 169.4 154.6 West 342.5 276.1 224.2 SOURCE: h ttp ://w w w .re a lto r.o rg .

a. Use 2007 as the base year to construct a simple price index for each region.

b. Use the percentage decline in home values to discuss regional differences in price drops.