Though national home prices are showing declines, non-distressed home tell a different story.

We all saw the headlines; CoreLogic’s Home Price Index (HPI) fell 1.3 percent from September to October and 3.9 percent from last year, while LPS reported a 1.2 percent drop from August and the Case-Shiller, the granddaddy of them all, posted a 3.9 percent annual decline.

Unsettling numbers, to be sure, but they are only half of the story. We reported earlier that when distressed properties are not factored in to CoreLogic’s HPI, annual declines were only 0.5 percent, and the Wall Street Journal‘s Nick Timiraos, spotting this fact, highlighted one of the most important, yet unspoken trends in housing: stabilizing prices.

“[T]he CoreLogic index shows an important emerging trend where home prices are stabilizing after excluding distressed sales,” Timiraos reported.

A large part of the price difference, Timiraos reported, has to do with the underlying sales criteria of distressed and non-distressed properties. While non-distressed homes are sold by either agents or owners with maximum returns in mind, the owners of distressed properties – banks – are often quick to slash prices and sell the homes as quickly as possible. Though the process quickly removes the homes from the banks’ balance sheets, it also poses a problem for prices.

“The upshot is that, the more homes being sold by lenders in any given month the faster prices tend to fall,” Timiraos wrote.

So as distressed home values have continued to decline through 2011, non-distressed homes have remained relatively stable.

In a Barclays Capital report Timiraos cites, the financial firm called the non-distressed home trend as  “the most important trend in the housing industry right now.”

Barclays also notes that if prices were to stabilize, they would shore up what is quite possibly the most important aspect of the housing market – buyer confidence.

“There is nothing that strikes fear in a homeowner’s heart than to hear that his home value has declined,” wrote Stephen Kim, a Barclays housing analyst. “But if it was home price trends that got us into this funk, it stands to reason that a recovery in sentiment will be similarly ushered in once price declines have abated — which is precisely what the CoreLogic price data shows us.”

And Timiraos points out that for certain markets, distressed properties are so prevalent that they must be acknowledged.

“You can’t deny the fact that if half of homes that sold in San Diego in a given year were distressed, that is the trend,” said Kyle Lundstedt, the managing director at LPS, in Timiraos’ article.