More Good News on House Prices — Case-Shiller House Price Index Continues to Improve in May


House prices continued to improve in May with Standard and Poor’s reporting the second consecutive monthly increase in both Case-Shiller composite house price indexes (HPIs) in May. The Case-Shiller Composite 20 (CS20) gained 1.1% (NSA) and the Composite 10 (CS10) was up 1.0%. This follows a 0.6% increase in both indexes in April, which was the first monthly increase since July 2010.


Prices improved in 16 of the 20 cities covered by the index on a non-seasonally adjusted basis. The greatest improvements were observed in Boston (+2.7%), Washington DC (+2.4%), Minneapolis (+2.6%), San Francisco (+1.8%) and Chicago (1.7%). Prices continued to fall in Detroit (-2.8%), Las Vegas (-0.9%) and Tampa (-0.6%). Phoenix was unchanged. Charts that present the historical HPI data for each of the 20 metropolitan areas are available by following this link.

Despite the increase in April and May, the indexes are appreciably below their year-ago levels, with the CS20 down 4.5% and the CS10 off 3.6% from the May 2010 readings. Of the 20 metropolitan areas covered by the index, Washington DC is the only city with a positive annual rate of change—up 1.3%. All others were down relative to May last year, with Minneapolis (-11.7%), Tampa (-9.5%), Phoenix (-9.5%), Detroit (-9.3%) and Portland (-9.1%) faring the worst.

These year-over-year declines, however, should be considered in context. House prices in May 2010 received a boost from the increased demand stimulated in the closing stages of the home buyer tax credit. With the support of the tax credit the CS10 and CS20 HPIs were up 5.44% and 4.64% respectively on a year over year basis. The subsequent decline, which extended over an eight-month period between August 2010 and March 2011, unwound much of the gains induced by the tax credit. It is noteworthy that both HPIs are above the level of the trough of April 2009: CS10 higher by 2.1% and CS20 up 0.4%.

Today’s increases are a positive signal that the price declines experienced in the post-tax credit period have subsided, and that some markets seem to be moving up based on their own improving conditions.

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