Case-Shiller Home Price Index

Home Prices on the Rise Nationally

18 of 20 markets tracked by the Case-Shiller Index showed rising home values in June.  It’s the 5th consecutive month with strong numbers and the best showing for the benchmark housing index since home values began deflating in 2006. 

Some would argue it’s a sign that housing has finally bottomed out. Even Case-Shiller representatives acknowledge that home prices are “on an upswing”.

Despite the Case-Shiller Index’s popularity with economists and the press, though, it’s falls short of being a perfect housing indicator.  As examples:

1. Its data is reported with a 2-month lag
2. Its sample set includes just 20 U.S. cities
3. Real estate isn’t a “national” market — it’s local

Nevertheless, flaws aside, Case-Shiller is still important.  It helps identify broader trends in housing and many people believe the housing is the keystone of the economy right now.

This is why June’s Case-Shiller Index gives cause for hope.  The housing recovery has a long road ahead but June’s Case-Shiller data shows that we’re heading in the right direction.

Case-Shiller Home Price Index

Using The Case-Shiller Index To Predict The End Of The Recession

For May, the Case-Shiller Index showed home values up in 15 of its 20 tracked U.S. markets.  It’s the first time in nearly 3 years that the index showed such strength and a signal that home prices may be turning higher for good.

According to a Case-Shiller Index spokesperson, “this could be a signal that home price declines are finally stabilizing.”

However, just because the Case-Shiller Index indicates home values are stabilizing, doesn’t necessarily make it true.  Real estate is a local phenomenon and the Case-Shiller Index tracks just 20 U.S. cities. 

Residents of every other town are unaccounted for.

Additionally, even within the 20 tracked cities, there are distinct neighborhoods and pockets that are under-performing the general market — just as there are those that are over-performing.  The Case-Shiller Index can’t get that granular.

Despite its imperfections, the Case-Shiller Index remains a helpful, broader measurement of U.S. real estate.  Economists believe that housing led the U.S. into the recession and they believe housing will lead us out, too.

If that’s true, May’s figures are the next step in the right direction.

Case-Shiller Home Price Index

Home Prices Show Improvement in 19 of the 20 Case-Shiller Markets

Here are some of the headlines about the story:

• Case-Shiller Home Prices Decline Only 18% (Business Week)
• Case-Shiller Less Bad (Seeking Alpha)
• Home Prices In 20 Cities Drop Less Than Expected (Bloomberg)

Now, the headlines feel negative, but they’re actually highlighting some key strengths in April’s figures.  For example, nearly half of the Case-Shiller markets posted gains in April and all but one showed month-over-month improvement.   

It’s a step in the right direction but doesn’t mean that housing has turned around for good. 

We have to be careful about how we interpret the Case-Shiller Index because it’s an imperfect housing gauge.  The most obvious Case-Shiller flaw is that it only measures home values in 20 cities nationwide and they’re not even the 20 biggest cities.

Houston, Philadelphia, San Antonio and San Jose are excluded from the report and each ranks among the country’s 10 most populous areas.

That said, the report is still important because the Case-Shiller Index identifies broader housing trends and that helps to shape economic policy.

Not only versus last month but also versus last year, the pace at which home values are falling appears to be getting slower.  This is the third straight month Case-Shiller has reported as such.

Now, three months makes a trend, but the data has to stay strong through the summer months to mark a bona fide turnaround.  If the Case-Shiller Index shows strength for May and June, it could be the signal for which the markets have been waiting.

Case-Shiller Home Price Index

On A Monthly Basis, Home Values Look Better Than The Press-Reported Annual Figures

Each month, researchers measure home values in 20 large U.S. cities, then compile their findings in a report called the Case-Shiller Index. It’s a popular measurement of housing health across the country, but it’s far from perfect.

As 3 examples:

• It gives more weight to expensive homes than inexpensive ones
• Its sample set includes just 37 states of 50 states
• Real estate isn’t a “national” market — it’s local

All that said, however, the data is still important. The Case-Shiller Index helps identify broader trends in housing and it’s widely believed that the economy won’t recover until the sector starts to stabilize.

We may be at that recovery point now.

Despite newspaper headlines blaring about 19 percent drops from March 2008, the month-to-month values appear to be stabilizing and the latter is the more important development. 15 of the 20 markets covered by Case-Shiller either improved, stayed flat, or declined by 0.2 percent or less.

Versus 2008, the rate of speed at which home values are falling is slowing.

Furthermore, because the Case-Shiller Index is on a 2-month delay, it doesn’t account for all of this year’s Spring Buyers, or first-timers taking the $8,000 first-time homebuyer tax credit.

Two months don’t make a trend, but if Case-Shiller Index continues to report similar data for April and May, it could be the signal that housing finally bottomed.

Case-Shiller Home Price Index

The Decline in Home Values Slowed in February, Says Case-Shiller. Probably in March and April, Too.

The Case-Shiller Index is a popular reporting tool for the nation’s home prices. Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public.

The Case-Shiller Index is not a perfect measurement by any means. It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states. But that doesn’t diminish its importance to the housing sector.

Because the Case-Shiller Index comes from the private sector, it’s an excellent counter for the U.S. government’s home value reporting tool — the House Price Index.

In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government. This doesn’t make either method more accurate, it just provides a helpful point/counter-point.

And that’s why February’s Case-Shiller Index is so important.

Despite reporting falling values in each of its 20 tracked cities, the Case-Shiller Index showed values falling with a lesser speed and intensity than in months prior.

It’s a small victory, but if the Case-Shiller Index shows that home prices are starting to mend, you have to pay attention — especially because the index is on a 2-month delay and doesn’t account for Spring Buyers or the $8,000 first-time homebuyer tax credit.

One month doesn’t make a trend, but if often-negative Case-Shiller Index turns in similar numbers for March, it could be the signal that housing has bottomed.

Case-Shiller Home Price Index

Are Home Values Rising Or Falling? The Answer Depends On Who You Ask.

A report published Tuesday showed that home values fell nearly 3 percent in January 2009 versus the month prior and by 19 percent from last year.

On the surface, data from the study looks like more bad news for housing. With deeper inspection, though, we uncover reasons to discount the report’s finding.

For one, the report includes home price data from just 20 cities around the country — and they’re not the 20 most populated cities, either.

For example, data from #4-ranked Houston is not included and neither is #7 San Antonio nor #10 San Jose. #54 Tampa, however, is included.

Secondly, the report is two months lagging.

Published March 31, its data is only accurate as of January and a lot has happened in the last 2 months. This includes a record-drop in interest rates and the introduction of an $8,000 tax credit for qualified first-time home buyers. The stimulus has helped raise home sales volume on both new homes and previously-owned ones.

And lastly, one more reason to question the relevance of the Case-Shiller report is that a government study on the same topic showed home values rising over the same period, not falling. According to the Federal Housing Finance Agency, home values grew 1.7 percent from December 2008 to January 2009.

In the end, home values are a local phenomenon that can’t be summarized as a national “summary”. National data can be helpful for watching longer-term trends, but it shouldn’t be used to make a “Buy or Not Buy” decision.

For that, talk with a real estate professional with access to local data instead.

Source
List of United States cities by population

(Image source: LA Times)

Case-Shiller Home Price Index

An Interactive Chart For Home Values

The S&P/Case-Shiller Home Price Index is a popular measure of domestic home prices, released monthly.

The index reports on the largest 20 U.S. markets, painting a broad picture of real estate values nationwide.

Despite the Case-Shiller Index’s two obvious flaws — (1) it only counts repeat sales on single-family residences, and (2) it only includes 20 major housing markets — the model is helpful in identifying broader real estate trends in our nation’s largest cities.

But data is just data. Sometimes, it takes a good picture to bring it all home. Enter The New York Times.

On its website, The Gray Lady posted an interactive Case-Shiller graphic. For each of the 20 cities studied, users can compare how home values rose versus the national composite throughout the early part of the decade, and how values have fallen since.

Not surprisingly, of the 20 cities that showed stable growth pre-2006, nearly all are outperforming in the current real estate climate.

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