Case-Shiller June Numbers

The June Case-Shiller numbers are out and as expected they indicate further firming of the housing market. Before I get to them let me first note the consumer confidence numbers.

The NYT reports that consumer confidence as measured by the Conference Board was up to 54.1 in August from 47.4 in July. Economists had expected an increase to 47.5. A healthy reading is around 90, so to say the least we have some room yet for improvement.

Now on to Case-Shiller.

The 20 city index was up 1.4% in June which was triple the increase in May. On an annual basis the decline in home prices slowed from 15.4% from 17.1% in May. Seasonally adjustments show that May was actually  a flat month and June prices increased 0.7%. Only two cities showed a decline in prices in June on an unadjusted basis and five saw price declines on an seasonally adjusted basis.

Here from the WSJ Real Time Economics blog is the unadjusted data for the 20 cities:

About the numbers: The Case Shiller indices have a base value of 100 in January 2000. So a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the metro market.)

Home Prices, by Metro Area

Metro Area	June 2009	Change from May	Year-over-year change
Atlanta	107.52	1.5%	-13.7%
Boston	152.71	2.6%	-5.9%
Charlotte	120.66	0.7%	-9.6%
Chicago	124.99	1.1%	-16.7%
Cleveland	106.38	4.2%	-3.0%
Dallas	119.68	2.7%	-2.2%
Denver	126.92	2.5%	-3.6%
Detroit	69.49	-0.8%	-25.0%
Las Vegas	107.31	-2.0%	-32.4%
Los Angeles	160.90	1.1%	-17.8%
Miami	145.37	0.5%	-23.4%
Minneapolis	113.48	3.1%	-19.8%
New York	171.49	0.4%	-11.9%
Phoenix	104.73	1.1%	-31.6%
Portland	148.47	1.0%	-15.2%
San Diego	147.31	1.6%	-16.0%
San Francisco	124.70	3.8%	-22.0%
Seattle	149.53	0.4%	-16.1%
Tampa	140.90	0.4%	-19.5%
Washington	174.32	2.8%	-11.8%




And with that let the debate begin to rage. Is it real or just a head fake? Lots of investors and first time homebuyers chasing low priced homes and tax credits or a reversal in the trend of falling homeownership rates? Are foreclosures close to peaking and thus supply coming back in line with demand? Has the expectation of falling home prices been expunged from buyers’ psyches or are they still leery?

Lots of questions, precious few answers. The data all summer has been on the positive side but the skeptics still have lots of credible objections to support a false start hypothesis.

I’m solidly planted on the fence. I think the recent sales and price data are pretty positive but I don’t dismiss the skeptics’ points. I don’t think we have a healthy real estate market with so much of it concentrated in a niche of the market and dependent upon investors and marginal buyers. Of real concern, is how much of the recent activity is a “cash for clunkers” phenomenon in which we simply move forward future purchases. Some for sure, but I don’t know how much.

Economies are tricky to call as everyone knows and so are its parts. The housing market may in fact be building a solid foundation from which to grow and we won’t see it until we look back later. In the meantime, keep an eye on inventories. They’ll be the key going into the rest of the year.

more: here

Update: Here from the WSJ Real Time Economics blog are some economists’ reactions to the news. Generally, they take it as positive.

–Not only are housing prices stabilizing, they are starting to grow. The three most widely used yardsticks for measuring housing prices (The National Association of Realtor’s median price, the Federal Housing Finance Agency (FHFA) price indexes and the Case-Shiller prices indexes) are telling a similar story…First, it will help banks holding toxic assets: With house prices stabilizing, these assets will regain some of their lost value. Second, the market for selling homes will get a short-term shot in the arm from the so-called “fence-sitters” who have been waiting for prices to fall even more before buying a home. Third, rising prices will help consumer spending through the wealth effect. –Patrick Newport, economist at IHS Global Insight

–The breadth of gains across cities was impressive, with eighteen out of twenty cities recording increases, some of them very strong. Cleveland rose 4.2% after rising 4.1% last month, so its yearly rate is now down only 3%. …Some have argued that the recent improvement is simply a seasonal effect. That is playing some role, but seasonally adjusted, prices were flat in May and up 0.8% in June, suggesting that some underlying improvement is occurring…. Overall, this appears like a genuine turn. –Ian Morris, HSBC’s head of U.S. economics

– Will the bottom hold? The main concern here is that various foreclosure moratoria temporarily limited the downward pressure from distressed properties and as foreclosures pick up again, prices will head lower. This is certainly possible, but it feels like the firming in demand for homes will be sufficient to counteract the downward influence from the ongoing foreclosure wave…While it would be nice (not least as a homeowner myself) to think that home prices are going to quickly recover a chunk of the ground lost over the past 2 or 3 years, we are simply not that optimistic. –Stephen Stanley, RBS Securities.