In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. This update discusses the latest Case Shiller price index.
- Case Shiller data is yet another source confirming that home price increases continued in August 2013. The 10-city and 20-city indexes each rose by 12.8 percent from August 2012. NAR data released last week showed a gain of 13.4 percent in the same period and showed continued but slowing gains of 11.7 percent in the year ending September 2013.
- While this increase was the 15th consecutive month of year-over-year increases in home prices reported by the 20-city index and the 6th consecutive month of double-digit year-over-year gains, the index remains 20 percent below the peak it reached in July 2006.
- NAR reports the median price of all homes that have sold while Case Shiller reports the results of a weighted repeat-sales index. Because home sales among higher priced properties have been growing more than among lower price tiers, the NAR median price has risen by more than the weighted repeat sales index—which computes price change based on repeat sales of the same property.
- Case Shiller uses public records data which has a reporting lag. To deal with the lag, Case Shiller data is based on a 3 month moving average, so reported August prices include information from repeat transactions closed in June, July, and August. For this reason, the changes in the NAR median price tend to lead Case Shiller. NAR data showed decelerating but continued double-digit growth in September, so expect repeat prices to follow suit.
- Case Shiller reports price indexes for the 20 cities it tracks in addition to the 20-city index. By its measure of prices, Denver and Dallas are the only metro areas to have fully recovered from housing price declines to reach new highs.
- As seen in other house price measures such as NAR’s, Case Shiller showed the biggest 1-year price growth in western cities such as Las Vegas (29.2%), San Francisco (25.4%), San Diego (21.5%), and Los Angeles (21.7%). The smallest year-over-year gains were seen in the East and Midwest in cities like New York (3.6%) and Cleveland (3.7%).