Case-Shiller 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 discusses the Case-Shiller Index.

• The latest reading of the Case-Shiller index was announced this morning which covers the three months of November, December and January.  For the 5^th consecutive month, the non-seasonally adjusted 20-city index fell, but the 0.8% decline from December to January was the smallest in 4 months suggesting a bottoming pattern.
• Compared to the same time a year ago, the gap declined to 3.8% after expanding to 4.0% in December.
• Three metro areas showed month-to-month improvements relative to December including Miami, Phoenix, and Washington.  The year-over-year price gap improved in 10 of the markets and Denver, Detroit, and Phoenix were positive outright.
• Consumer confidence eased 1.4 points from February to 70.2 in March driven by a 5.4 point drop in the expectations component of the index.  Concerns about job creation and the business environment dominated the decline in the expecatations component of the index, but consumers expect incomes to grow.
• Today’s Case-Shiller estimate incorporates more of the positive price movement that showed up in NAR’s median price reports for December and January and less of the fall’s weak trend.  NAR’s release last week on the February median home price suggests that the positive trend continued.  As more current data is added to the Case-Shiller index next month, the index is likely to reflect sustained improvement that is broad, including more metro areas.   While consumer confidence is significantly higher than it was at the end of last summer, the decline in the expectations component this month is worth noting.  Confidence is very important to home sales as a stronger job market and income growth help consumers make the decision to purchase large goods like homes and cars.   Higher oil and gas prices may be driving this pessimism, which could rise through the summer as is the typical warm weather pattern.   However, cheap, but rising mortgage rates and stronger home prices could draw many fence sitters into the market.