Daily Economic Update: Case-Shiller Price Index

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the Case-Shiller price index.

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  Home values fell in March according to the Case-Shiller price index.  The decline of 0.8 percent reflects conditions of 20 large metro markets.  Compared to one year ago, the prices are down by 3.6 percent.
• The data, though stated as March, is not purely March data.  It is a 3-month moving average of January, February, and March numbers.  The data is a rear-view mirror look at price conditions that partly capture what happened 5 months back (January data now being revealed while we are nearing June).
• With this caveat, all 20 large markets suffered a price decline compared to a year ago.  The one exception was the D.C. area, which showed a price gain of 4.4 percent.  Seattle was another oddity with a monthly price gain, though still down from a year ago.
• The Case-Shiller data also does not capture many smaller metro markets and rural areas.  Farm land values have been rising robustly due to rising commodity prices.  Home values are rising in North Dakota and Alaska, where employment conditions are rock solid.
• NAR and other price measurements also have shown price weakness  - about 5 percent lower prices from one year ago in the national aggregate.  But clearly, this second round of decline is softer.  Consider: prices fell about 30 percent from 2006 to 2009.  Then prices actually rose  by 1.3 percent in 2010 according to Case-Shiller data.  Now prices have been weakening, dipping into the low single-digits.  Price declines may in fact be over as of May, but it won't be possible to know either way until well into November if using the Case-Shiller lagging data.