In an article today at TheStreet.com I presented my case for the lows of home price indexes this past spring being exceeded to the downside this winter.
Two articles last Friday discussed the seasonal effects detracting from clarity in interpretation of the National Association of Realtors existing home sales data and the record breaking price decline in August for new homes sales reported by the U.S. Census Bureau. The article at TheStreet.com includes, for the first time, the latest data from the S&P Case-Shiller Housing Index, released Tuesday morning.
The first two articles discuss data through the end of August, while the new data from Tuesday covers only sales through the end of July. All three data sets are showing that a possible price recovery was underway at the end of July. We will not know until the last Tuesday in October if the Case-Shiller data for August will reflect the other two data surveys. But, because Case-Shiller has followed a pattern similar to the other two surveys through the end of July, it is not unreasonable to anticipate that it will continue for August data. If that is the case, we probably will not have yet seen the bottom for national average house prices.
The Case-Shiller house prices (Composite-10) for the past 23 years are shown for the months of June and July in the following table.
The June to July change this year is the second largest in the 23-year history of the index. New home prices showed a similar increase (1.46%) from June to July, right in front of the record plunge from July to August. Will Case-Shiller show a related result when that survey reports August?
The article at TheStreet.com discusses historical perspectives and the variation in the current situation across the twenty largest housing markets. A simple methodology is offered for identifying the markets that are currently the strongest for existing housing, as well as the weakest.
The same data (Case-Shiller) has been analyzed by Tom Brown with a more optimistic interpretation. Tom has used a second derivative analysis that indicates acceleration has reversed from months of being negative to being positive in July. That result is strongly influenced by the very large monthly advance from June to July that was noted above. Read what Tom has to say -- there are two sides to every story and his analysis makes a logical case for his opinion.
For my part, I am staying with my opinion that housing prices are headed lower.
