Case-Shiller Home Price Index Digs Deeper

In a very timely move, Standard & Poor's has expanded the S&P/Case-Shiller Home Price Indexes to include subindexes for low-, mid- and high-price homes. With the 10-city and 20-city composite indexes both taking a dramatic turn downward, any tools offering more details on the declines on a city-by-city basis are undoubtedly welcome.

Seventeen of the 20 metropolitan areas covered by the S&P/Case-Shiller Home Price Indexes have their own subindexes. Charlotte, North Carolina; Detroit, Michigan; and Dallas, Texas, are the only ones for which subindexes are not calculated, nor are subindexes available for the composites.

Each tier represents roughly one third of the total sales represented by the index at its time of calculation, and a house's price range is determined by its first sale price in any given sale pair. A sale pair results when a home is resold and its previous price is matched to its most recent price.

The new indexes provide the S&P/Case-Shiller index series with an added granularity. For example, the Cleveland metro area index is down 4.2% from its July 2006 peak. However, its subindexes offer a little more color on what exactly is going on. Cleveland's low-price subindex is down 10.0% from the peak it reached in September 2005. The mid-price subindex, by contrast, is down 4.6% from its June 2006 high, and the high-price subindex is down just 3.2% from its August 2005 high. Obviously, low-price homes have been more affected by the declines in the housing market, while high-price homes have had an easier time maintaining their values.

In addition to the new subindexes, S&P is also publishing the number of sale pairs at the time of calculation for each metro area index and the composite indexes. The number of sale pairs for the 20-city composite index peaked at 185,800 in August 2005; in contrast, the number of sales pairs for this past August was 116,300, a decline of more than 37%.

The next index release is on November 27.

Written by Heather Bell.