S&P/CaseShiller home price index
The May S&P/CaseShiller 20 city home price index fell 17.06% y/o/y, better than the forecasted drop of 17.9% and its the smallest fall since Aug ‘08. The overall index had its first uptick since July ‘06 (the month of its record high) m/o/m but is still down 32% from that record high. Y/o/Y declines continue but 14 of the 20 cities had m/o/m gains with Cleveland leading the way. In last week’s June Existing Home Sales # (where contracts were likely signed in the April-May timeframe), the NAR said distressed sales made up 31% of sales, down from the recent trend of 45-50%, thus a slower rate of foreclosures likely had an influence on the better than expected home price index. Mortgage rates in June rose 50 bps from May, so next month we’ll see what influence, if any, it had on pricing. The economic stress all comes down to household debt and home prices and thus CaseShiller data grows in importance. This data is not seasonally adjusted and is thus too early to declare a home price bottom.
July 28th, 2009 at 9:44 am
I know it’s too early to declare a home price bottom but isn’t it the same thing as July/Aug 06 when people didn’t want to declare a home price top?
July 28th, 2009 at 10:01 am
You won’t know the bottom til it’s well past. Too many factors to draw a conclusion from a small period of time. For example, there was a moratorium on foreclosures during the winter. Fewer foreclosures on market meant less price pressure, rate on 30 year treasuries is now almost a full point higher than April/May. Reports that banks were avoiding foreclosures or keeping REO’s off market in hopes of a better market. If a lot of supply comes on, prices may drop again.
Not saying all this definitely will have an effect, it’s just that there are too many unknowns. And some may take awhle to have an effect.
July 28th, 2009 at 10:51 am
@Mike
I know banks are not reporting ALL of their foreclosures. Many cancel the foreclosure at the last minute. There are many REO’s that haven’t been put on the market either. So I know I’ll have to wait before jumping to any conclusions.
July 28th, 2009 at 12:56 pm
[...] Home prices (again) fall but less than expected [...]
July 30th, 2009 at 7:05 am
VERY interesting piece on the ECRI’s site about their Leading Home Price Index.
Charts here: http://www.businesscycle.com/
Part of post… (from May)
END OF HOME PRICE DOWNTURN IN SIGHT
“With U.S. home values far below their boom-time highs, most observers are resigned to an indefinite downdraft in home prices. It is this uncertainty about the ultimate bottom in home prices that has converted so many mortgage-related derivatives into toxic assets. Yet, at long last, the end of the home price downturn is in sight.
One key reason for the turnaround in the outlook is housing affordability, which is hovering around all-time highs. The current combination of drastically reduced home prices and very low mortgage rates has hardly ever been seen in living memory…
Most importantly, the U.S. Leading Home Price Index (USLHPI), designed to predict cyclical turns in real home prices, has now been rising for five months… But a three P’s analysis (see chart below) of the level of the USLHPI reveals an even more promising picture… the recent upturn in the USLHPI is almost as pronounced as the median in comparable past cycles… it is almost as pervasive; and … it is just as persistent. The implication is clear: this is a genuine cyclical upturn in the level of the USLHPI. Such an upturn in the USLHPI amounts to a forecast of a cyclical upturn in the level of home prices this year…”