House Prices


Home prices moved up over the last 3 months according to the Case-Shiller 10-city and 20-city composite measures.  The report for April, which includes data from February and March as well, showed a seasonally adjusted annual increase of 3.7% for the 10-city index and a 5.4% increase for the 20-city index.  This is the eleventh month in a row of an increase in the 10-city index and the 9th out of the past eleven months increase in the 20-city index.

The home buyer tax credit deadline of the end of April probably helped maintain increases and should continue to prop up home prices through the June deadline for a closing and perhaps beyond since the index covers three months.  The primary driver between positive and negative house price movements is the share of homes sold in distress.  As pent up demand releases and mortgage modifications spread out the timing of distressed properties hitting the market, a more consistent positive momentum should take over.

Standard and Poor’s, the producers of the index, cautions that the seasonally adjusted figures may be distorted by the unique and non-seasonal impacts of foreclosures, short sales and the home buyer tax credit deadlines.  The not-seasonally adjusted (NSA) indexes rose in April for the first time in 5 months.  And, 18 of the 20 individual city NSA indexes also increased.  The NSA changes for individual metro areas were also much more positive with only 2 cities falling (New York and Miami).  In contrast, the SA indexes of 17 cities fell, with only Miami, New York and Seattle registering an increase on a seasonally adjusted basis.

Both composite indexes are at their mid-2003 levels when annul sales levels were 1 million more than current levels.  Individual metro areas vary widely.  The current index level in Detroit was last seen in 1994.  Charlotte, Portland (OR), Dallas and Seattle are back to 2005 levels and Denver, Washington DC, and New York are back to 2004 levels.

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