Economists' Outlook

Housing stats and analysis from NAR's research experts.

Daily Economic Update: Case-Shiller, Consumer Confidence

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the Case-Shiller home price index and consumer confidence.

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  • After 8 months of consecutive month-to-month declines, the non-seasonally adjusted Case-Shiller index ticked upward in April.  This is good news for the housing market, but not much of a surprise as prices tend to rise every spring and summer with an increase in demand from colder months.
  • However, of greater importance to the market is the fact that the seasonally adjusted rate of price growth continued to approach a turning point.  The rate of year-over-year price declines had been diminishing in recent months and continued in April as the 12-month price deficit eased just 2 tenths of a percent from 3.8% to 4.0%, compared with larger declines earlier this spring, suggesting that the market is approaching a price bottom.  This month’s Case-Shiller index incorporated data over the 3 months of February, March and April, so it does not yet reflect the strength in prices that showed up in NAR’s release of May price data earlier this month.  Consequently, the year-over-year price deficit in the Case-Shilller index will likely follow suit, shrinking in the coming months.
  • At the metro level, 13 reported an improvement in non-seasonally adjusted prices in April versus March, but only one market, Washington, DC, was up relative to the same time in 2011.
  • On a worrisome note, consumer confidence fell another 3.2 points to 58.5 in June.  The report reflected pessimism about the current employment situation and the potential for slow job creation.  Respondents also indicated a reduction in plans for large purchases like cars and houses.
  • The Case-Shiller home price index is in line with NAR’s figures, which show a sharp decline in prices relative to last year, but a trend that has moved toward stabilization.  High gas prices and employment concerns continue to weigh on consumers as evidenced by consumer confidence this month.  However, as the year progresses, 2011 prices will be compared with weaker 2010 prices that followed the spring tax stimulus.  Consequently, the year-over-year price gap will ease, reflecting stronger buyer confidence and pricing in the current market.
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