Four Important Housing Charts

by: Casey Mulligan

Professor Shiller himself (with the ideas of supply and demand conspicuously absent from his analysis) said in June that housing price declines "may well continue for some time." Housing price data released Tuesday seem to further contradict his prediction.

When he said that, he had six months more data than I did in December when I said (based on supply and demand) that housing would turn around "summer 2009."

The chart below shows his index as a ratio to construction prices, together with the volume of construction activity (I am not sure about the most recent month's breakdown between tenant and owner occupied ... still working on that). I'll let you decide whether (as of June), the housing market was still in free fall.

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This next chart shows the OFHEO housing price index through June: it showed a turn-around even earlier than Case-Shiller did and continues to confirm that view.

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This next chart is from Sean MacLeod. (Thank you sir! He sent it before the June OFHEO was released). It compares 4 different indices. When I turn back to revising my paper about housing prices and construction, I will learn about the RPX index, but for now all I know is that Sean MacLeod makes a good case that it should be considered.

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Finally, the BEA has a quarterly index of the price of new "residential structures" (that is, housing!). The chart below shows that index together with quarterly averages of C-S and OFHEO through 2009 Q2.

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