Posted by Jonathan J. Miller -Tuesday, June 28, 2011, 11:01 AM
Its the end of the month and time for an S&P/Case Shiller Home Price Indices release.
Never any sleight meant to Bob, whom I personally admire, in my CS rants but toward the way the index is used and perceived. My Case Shiller report aversion has been well documented.
Consistent with the Case Shiller release confusion and lack of context, the June release of the February, March, April average closing price of December, January, February contracts show two things:
My friend Les Christie covers the month over month change which is the fundamental message of all CS releases.
They seasonally adjust so the fact that this really reflects January activity and that tends to see an uptick was therefore not a factor. This shows how useless the index is. The declines through December (their May release) reflect the tax-credit aftermath where the market was artificially depressed after being artificially inflated in early 2010.
Washington DC continues to be the strongest of the 20 cities covered, but MRIS/RBI & moi reported the like time frame in early February (just about 6 months ago).
Emphasis was placed on the year over year comparison, which ordinarily I’d agree with but since early 2010 house market was artificially pushed higher by the federal home buyer tax credit, it really isn’t.
The headline really should say closed housing prices in February, March, April in 20 U.S. Cities Fell 4%.
Here’s some sage insight in the piece:
“Home prices are still easing but the declines are not dramatic any more,” said Harm Bandholz, chief U.S. economist at Unicredit Group in New York, who correctly predicted the year- over-year drop. While month to month changes show “prices have basically bottomed and are moving sideways,” he said “we’re a long way away from significant increases in house prices.”
Two approaches to the same release and both are correct for different reasons and because of the 6 month data lag, we have no better understanding of the state of housing this month.