Tuesday, March 30, 2010

Case-Shiller Home Price Indexes Rise for 8th Month

The S&P/Case-Shiller Home Price Indices for January 2010 were released today. Highlights include:

1. Both the 10-City Composite and the 20-City Composite Home Price Indexes have increased for eight consecutive months for the first time since the spring of 2006, almost four years ago, and both indexes in January reached their highest levels in 12 months, since January 2009 (see top chart above).

2. Based on the percentage increase from the same month in the previous year, the annual rates of returns for both home price indexes improved in January for the 12th consecutive month, and while still slightly negative (-0.04% for the 10-City Index and -0.69% for the 20-City Index) the annual returns are close to be being in positive territory for the first time in three years (February 2007).

3. In three of the cities with the biggest annual January-to-January price declines in the Case-Shiller index like Las Vegas (-17.4%), Miami (-6.77%) and Phoenix (-4.5%), I have reported recently (
here, here (for all of Florida) and here) that the home sales in those markets have been strong, and consistently above sales levels from the same month in the previous year in each month for the last year or longer.

For example, both Florida and Las Vegas home sales increased in February for the 18th month in a row, and Phoenix home sales in February were the highest for that month since 2006.

Bottom Line: Nationally, home sales bottomed in January 2009, and have been on an upward trend for the last 12 months. The Case-Shiller Composite Home Price Indexes both reached a bottom in May 2009, and have now increased for eight straight months. Now that there's a gradual upward trend in both home sales and home prices, it's a positive sign that we've moved past the bottom of the real estate market, and are now moving slowly towards a full recovery. The falling prices through the middle of 2009 helped to bring buyers back into the market and bring about a better balance in the market, as excess inventories have gradually been cleared. As Larry Kudlow reminds us, "Market forces work."


At 3/31/2010 6:34 AM, Blogger stilettoheels said...

The FHFA HPI has not bottomed.

The First American CoreLogic HPI may have bottomed.

Bottom line: It's premature to call the bottom in house prices with a 15% delinquent or in foreclosure rate.

At 3/31/2010 9:13 AM, Anonymous Anonymous said...

And it's also too soon to call a bottom now that the Fed is supposed to be ending their QE on the housing market today. Increasing rates and shrinking access to credit is once again going to choke off the buyers.

At 3/31/2010 11:21 AM, Blogger stilettoheels said...

Fed is supposed to be ending their QE

The Treasury is picking up the slack. The GSEs announced a $200 billion buyback for delinquents.

When is Treasury going to tack on the the $5.6 trillion GSE debt to the national debt?


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