Home prices did better than forecasters expected, but still dipped slightly in October. Average home prices dropped 0.1% in from September to October, according to the latest S&P/Case-Shiller Home Price Indices release. Home prices dropped in 12 of the 20 metro areas that make up the 20-city composite index. The twelve month picture, on the other hand, looks very strong. On an annual basis, prices rose 3.4% for the 10-city composite index and 4.3% for the 20-city composite. Here's a look at the long term trend: From the release, quoting David M. Blitzer , Chairman of the Index Committee at S&P Dow Jones Indices. “The October monthly numbers were weaker than September as 12 cities saw prices drop compared to seven the month before.” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The five which turned down in October but not in September, were Atlanta, Dallas, Miami, Minneapolis and Seattle. Among all 20 cities, Chicago was the weakest with prices dropping 1.5%, followed by Boston where prices fell 1.4%. Las Vegas saw the strongest one-month gain with prices up 2.8%." “Annual rates of change in home prices are a better indicator of the performance of the housing market than the month-over-month changes because home prices tend to be lower in fall and winter than in spring and summer. Both the 10- and 20-City Composites and 19 of 20 cities recorded higher annual returns in October 2012 than in September. The impact of the seasons can also be seen in the seasonally adjusted data where only three cities declined month-to-month. The 10-City Composite annual rate of +3.4% in October was lower than the 20-City Composite annual figure of +4.3% because the two weaker cities – Chicago and New York – have higher weights in the 10-City Composite." “Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength. Higher year-over-year price gains plus strong performances in the southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy. Last week’s final revision to third quarter GDP growth showed that housing represented 10% of the growth while accounting for less than 3% of GDP." Read the full release here .