Case Shiller: Only five housing markets in twenty show price increase
When I wrote about house prices six months ago, I said:
house prices are bottoming because we have seen a trend in year-on-year changes from January through May that looks likely to continue into the present day. If this trend (of less negative data) holds for a few more months, say through September or October’s data, you could say that the housing market has stabilized. By next summer, the year-on-year numbers would be positive.
But, it is early days yet. At a a minimum, I would like to see the next few months data. However, the ultimate confirmation will come through the Winter 2010 data from a far less buoyant time of year. And this won’t be released until next Spring.
I should add that we are talking about nominal prices here, not inflation-adjusted prices where we could see declines for much longer.
So, how are things looking today? Mixed.
We can speak of year-on-year gains in house prices in some markets (Dallas, Denver, San Diego, San Francisco) but on the whole, things are going in reverse. As I mentioned in the last two months, the number of markets where prices are rising has dwindled. This continues to be true.
- When the Case-Shiller index began increasing in July, 14 of 20 markets were showing an increase.
- Case-Shiller reported in August that 18 of 20 cities showed price increases.
- When Case-Shiller reported in September, 18 of 20 cities showed price increases.
- Then, in October the number turned down slightly to 17 of 20 markets.
- In November, the number really turned down. Only 10 of 20 markets rose in the data (for sales through September)
- Last month, it was 8 markets in twenty (for sales through October).
- This month it is five of twenty for data through November.
Can I give these numbers a positive spin? Sure: prices are moving more into line with reality. They need to come down further in bubble markets like Washington D.C. where I live. Maybe then, we will see a market-clearing price.
The telling number is the year-on-year composite numbers now at –4.6% for the Composite-10 and –5.4% for the Composite-20. These are still improving.
So, it is unclear where this is headed over the near-term. December existing home sales were way down when reported yesterday (see release here) and price action is negative in 15 of twenty major markets. But, this is the Winter. Things will be different when the selling season begins in the Spring.