Home Price Indices, 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 discusses the Case-Shiller index, the FHFA Home Price index and consumer confidence.

• The September reading of the Case-Shiller index was released this morning which covers the three months of July, August and September.  The non-seasonally adjusted 20-city index eased 0.6% from August to September in a typical, seasonal slowdown, but the year-over-year gap in prices eased as well, from 3.8% in August to 3.6% in September.  The later trend suggests continued favorable, though sluggish movement in prices toward a bottom.
• Only three MSAs increased from August to September including New York, Portland and Washington, DC.  However, relative to last year, only Washington and Detroit are in positive territory.  Since the Case-Shiller index incorporates data for the three months of July, August, and September, today’s measure does not yet reflect the more recent price trend that showed up in NAR’s release of October price data last week.
• Also released this morning was the Federal Housing Finance Agency’s monthly same-sale price index.  That index rose a surprising 0.7% from August to September on a non-seasonally adjusted basis.  As a result, the year-over-year gap in prices eased from 4.1% in August to 2.1% in September, a strong, favorable movement.  The FHFA’s index is broader than the Case Shiller in that it incorporates all 336 metropolitan statistical areas defined by the Federal government versus just 20 included in the Case-Shiller index.
• Consumer confidence surged in November, rising 15.1 points to 56.0 from a month earlier.  Both the index for the current situation as well as that for expectations jumped from last month’s sharp decline in this latest reading.  Confidence tumbled in August after economic growth was revised downward, Congress could not agree on a budget resolution, and concerns about the Greek debt crisis re-emerged.  Today’s reading is the strongest since July.
• Today’s information on home prices is a mixed bag.  While the Case-Shiller index only showed a modest improvement, the FHFA’s index, which is a broader measure of the national housing market, showed a marked improvement.  In a more important shift, the jump in consumer confidence should help to revive sluggish retail spending.  An expansion of consumer spending will help job creation and strengthen consumer confidence in turn.  Concerns about employment have also weighed on potential homebuyers and underwater owners alike.  Improved confidence and employment could boost demand for housing and stymie the flow of delinquencies.