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Case-Shiller Home Price Index

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s second update discusses the Case-Shiller home price index.

  • Case-Shiller May data, which is based on information from closings in March, April, and May, showed that home prices rose at their fastest rate since March 2006. The 10-city index was up by 11.8 percent from a year ago while the 20-city index showed gains of 12.2 percent. These gains are slightly higher than those measured by the FHFA last week and roughly in line with NAR and CoreLogic data for similar time periods. (all pictured in the chart above).
  • Looking at the city data, all 20 cities saw home prices increase for the month and the year. Twelve cities had double-digit price growth in the year ending in May, and four of those (Atlanta, Las Vegas, Phoenix, and San Francisco) saw home price gains of more than 20 percent. This data is consistent with other sub-national price breakdowns which have showed the largest home price increases have been in the West, where distressed and non-distressed inventory has been rapidly absorbed.
  • San Francisco had the largest year-over-year gain among the 20 cities, with home prices rising 24.5 percent. The smallest 1-year change was in New York, where prices rose only 3.3 percent.
  • Nearly all of the recent price releases cover a period of data before interest rates began their swift rise of 100 basis points. The most recent home price data comes from NAR’s June EHS release, which likely had some sales that were affected by the early rise in rates. The June data showed a continuing trend of double-digit price gains from one year ago. From June 2012 to June 2013, prices rose 13.5 percent according to the latest data. Expect Case-Shiller and other house price measures to follow suit in June.
  • Because NAR reports data on the median price of homes sold in a period, it is able to release data more quickly than other groups that employ a repeat-sales index process. While the NAR median price picks up fluctuations in house prices as well as the mix of homes sold in any given period, history shows that it is a reliable early indicator of future price changes.
  • Yesterday NAR’s June pending home sales index, an early indicator for July and August sales, showed some weakness, but not nearly as much as analysts had expected given the sharp rise in rates. The earliest measurement of July housing market activity will come with NAR’s July Existing Home Sales release scheduled for August 21. Will prices remain resilient in the face of rising mortgage rates? Our indicators suggest that the price level and rate of increase will hold as long as supply pressures remain. What do you see in your market?

Danielle Hale, Research Economist

As a Research Economist at NAR, Danielle studies tax issues, the wealth impact of home ownership, and different measures of home prices.

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