Case-Shiller Home Price

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 data is yet another source confirming that home price increases continued in November 2013. The 10-city and 20-city indexes each rose by 13.8 and 13.7 percent, respectively, from November 2012. NAR data released last week showed a gain of 8.9 percent in the same period and showed continued gains of 9.8 percent in the year ending December 2013.
• While this increase was the 18th consecutive month of year-over-year increases in home prices reported by the 20-city index and the 9th consecutive month of double-digit year-over-year gains, the index remains about 20 percent below the peak it reached in July 2006.
• It’s also of note that NAR data for November showed a deceleration or slowing in the rate of price growth whereas Case-Shiller data shows acceleration or increase in the rate of price growth. This is probably due to the lag in the Case-Shiller data.
• NAR reports the median price of all homes that have sold while Case-Shiller reports the results of a weighted repeat-sales index. 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 November prices include information from repeat transactions closed in September, October, and November. For this reason, the changes in the NAR median price tend to lead Case-Shiller.
• NAR data showed continued price growth in December but a deceleration from the double-digit pace seen in the summer and spring, so expect Case-Shiller 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 recent new highs, but Denver is slightly below the high it set two months ago.
• 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 (27.3%), San Francisco (23.2%), Los Angeles (21.6%), and San Diego (18.7%). The smallest year-over-year gains were seen in the East and Midwest in cities like New York (6.0%) and Cleveland (6.0%).