It's Getting Harder to Be a Housing Bear

by: Tim Iacono

It's getting hard to be a housing bear these days, particularly since the latest report(.pdf) on the S&P Case-Shiller Home Price Indexes showed another monthly increase, up 1.4 percent from May to June. On a year-over-year basis, prices remain down more than 15 percent, indexes for all 20 cities shown below.
IMAGE Note that the top-to-bottom end-positions of the curves on the right of the chart correspond to the order in the legend in the upper left to aid in viewing the data - this represents how well areas have clung to housing market gains since the year 2000.

In the most recent data, Washington took over the top spot from New York in what seems a bit unfair since the housing bubble was spawned in these two cities. Meanwhile, at the other end of the price appreciation spectrum, Phoenix overtook Cleveland for the second to last spot, still far behind Detroit which seems to have a lock on last place.

Monthly and quarterly data are shown in the table below.
IMAGE David M. Blitzer, Chairman of the Index Committee at Standard & Poor's noted:

For the second month in a row, we’re seeing some positive signs. The U.S. National Composite rose in the 2nd quarter compared to the 1st quarter of 2009. This is the first time we have seen a positive quarter-over-quarter print in three years. Both the 10-City and 20-City Composites posted monthly increases, as did most of the cities. As seen in both seasonally adjusted and unadjusted data, as well as the charts, there are hints of an upward turn from a bottom. However, some of the hardest hit cities, especially in the Sun Belt, show continued weakness.

Standard and Poor's provided both seasonally adjusted and non-seasonally adjusted data in this report and, in both cases, prices rose from May to June.

As shown below, there is a very strong seasonal component to the data, but the monthly increase is impressive nonetheless. The bad news for housing bulls is that the month of June is the peak month in this seasonality.
IMAGE The next few months of home price data will be quite interesting, but, prices around the end of the year should provide a much better picture of how this year's price cycle shapes up compared to recent years and, most importantly, how much of the recent index gains are given back between September and March.