The May 2009 20-City Case-Shiller Composite Home Price Index fell 17.1% from May 2008, the fourth month in a row that the y-o-y rate of decline for the index gotten smaller. 17.1% is still a sharp decline.

We may be on the way to recovery,” said Maureen Maitland, vice president of S&P’s index services. “I say ‘may’ because it’s only been a couple months of data and home prices are seasonal … It will take a couple more months to see if we have turned around.”

This quote from S&P kind of confused me since, S&P/CSI has been seasonally adjusted since November 2008.

What’s got everyone so excited is m-o-m:

Looking at the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006. To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing”.

WSJ/Real Time Economics has a nice summary of the release.

Remember, this index tracks prices only, not sales activity. Sales trends lead price trends.

I think the takeaway with the release is that the rate of decline is getting smaller which is a good thing and it does suggest the potential for improvement going forward. But this provides no support that the moment is at hand and its only up from here. Still, I’ll take what I can.

WET BLANKET UPDATE: Confidence among U.S. consumers fell more than forecast in July


6 Responses to “[Case-Shiller Index] 18.1% Becomes 17.1%, But M-O-M Is More Positive”

  1. Rita Bradley says:

    Jonathan, I don’t know that anyone is taking the foreclosure moratoriums into account when looking at this data. California got a new one June 15th. The moratoriums keep the prices from dipping further. I suspect this is a small bubble of confidence that will burst. Don’t shoot the messenger.

    • Good point Rita. Compassion aside, moratoriums make price fall harder because they tend to force a larger number of properties onto the market right after expiration

  2. Rita Bradley says:

    Well, to keep things balanced, I should mention that banks may not need an official moratorium to prevent them from foreclosing on homes-it’s probably their call right? Their “books” look better with less foreclosures on them, so in their minds, it’s better to hold off. Also, I’m sure you’re aware of shadow inventory, homes have been through the foreclosure process but are kept off the market to keep prices from plummeting further.

    This being said, I have a feeling the “pent up” foreclosures won’t all come on the market at the same time.

  3. With the recent laws allowing the lenders to “sell” their reo inventory to holding companies and then renting them out, the foreclosure will not be hitting the market at one time for certain. In fact banks now control both supply and demand in the market with the demand being those who qualify for loans and the supply being their reo inventory which is rented out and not on the market. Great time to be a bailout bank, bad times for everyone else! Thanks, GK

  4. Edd Gillespie says:

    The new practice of banks holding their foreclosure inventories may turn out to be for the higher good, although at this point I’m convinced that is not the motivation.

  5. Nampa real estate makes a good point!