Case Shiller Has Second Consecutive Monthly Decline, Warns Of "Bleaker Picture For Housing", Momentum Gone

Tyler Durden's picture

While the sell-side community urgently continues to pimp Seasonally Adjusted Case Shiller data, despite the Case-Shiller index creators' own wishes that NSA data be used, it is becoming increasingly difficult to mask the fact that home price momentum is fading. This is precisely what one sees when looking at the change in unadjusted prices, which in December posted the second sequential decline in a row, dropping by -0.08%, following a -0.05% drop in November for the 20-City Composite index, and the biggest sequential decline since November 2012. The annual increase of 13.42% was in line with the expected 13.4%, and was the third month in a row of declines in annual house prices, something we have known for a while, and which the 2 month delayed Case Shiler index finally confirmed. Finally, we are grateful to Case Shiller for being the first to admit that it was not all the weather: "Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability." Let's hope there is no rain in the Spring and sun in the summer then as everything else is already bad and getting worse.

However most ominously, as the report itself confirmed, the upside momentum in home prices is all but gone.

In December, the 10-City Composite remained relatively unchanged while the 20-City Composite showed its second consecutive monthly decline of 0.1%. Year-over-year, the 10-City and 20-City Composites posted gains of 13.6% and 13.4%, approximately 30 basis points lower than their November rates. Chicago showed its highest year-over-year return since December 1988. Dallas set a new peak and posted its largest annual gain since its inception in 2000. Denver declined 0.1% and is now 0.7% below its all-time index level high set in September 2013


“The S&P/Case-Shiller Home Price Index ended its best year since 2005,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly Composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum.

The geographic breakdown:

After 26 months of consecutive gains, Phoenix posted -0.3% for the month of December, its largest decline since March 2011. Phoenix once led the recovery from the bottom in 2012, but Las Vegas, Los Angeles and San Francisco were the top three performing cities of 2013 with gains of over 20%. The Sun Belt, with the exception of Dallas, Miami and Tampa, saw lower annual rates in December when compared to their November numbers. The six cities with the highest year-over-year figures saw their rates decline (Las Vegas, San Francisco, Los Angeles, Atlanta, San Diego and Detroit) and most cities ranked at the bottom improved (Denver, Washington and New York) – Charlotte and Cleveland were the two exceptions.

And the bleak conclusion:

Recent economic reports suggest a bleaker picture for housing. Existing home sales fell 5.1% in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability. Mortgage default rates, as shown by the S&P/Experian Consumer Credit Default Index, are back to their pre-crisis levels but bank lending standards remain strict.”

Source: Case Shiller

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Max Damage's picture

People don't buy houses anymore, they buy TESLAs. $320 price target this morning. MOARRRRRRRRR

Dr. Engali's picture

Maybe the banks should start rethinking the strategy of holding empty houses on their books to prop up prices. Nah.... what a silly thought, we wouldn't want them to take any losses now would we?

NoDebt's picture

Mold and termites will finally accomplish what billions in bail-outs and government housing programs could not.

nuclearsquid's picture

Real estate is going apeshit crazy.  I think the algorithm at zillow is breaking.  The house I own was worth 703k at the height of the bubble according to zillow, and it has steadily ground down to a low of 446k 7 months ago (I bought it at the bottom at 415k).  Now, in the last three months, the price has taken a hockeystick turn to 605k.  WTF?  inventories are increasing in my area and there have been no recent sales of note.


swmnguy's picture

No kidding.  I know exactly what you mean.  The Zillow valuations for my house have been all over the map.  They were recently completely FUBAR'd by a couple buying a flipped house two doors down; the place was trashed and on the market for $80k, but a flipper bought it and did the usual sand the floors, install granite countertops and stainless steel appliances and tile the bathroom routine and sold it for $280k.  My house on Zillow went from about $215k to about $285k over two months.  Utter baloney.  Fortunately when I bought in 2009 for $226k, I had just sold my starter home and netted $100k to put down.  All I care about is the monthly nut, which is $1050 all in (including tax and insurance).  The only way the appraisable value of the house matters to me at this point is how much I can get in a HELOC to help smooth out the cost of maintenance and what-have-you.  But tracking these online valuations is enlightening; it's a joke.  I'm in Minneapolis and there is a movement of what's left of the middle class back into the core city from the exurbs, so sale prices are going back up. 

thamnosma's picture

You mean rich liberals want to hang with the Somalis?

swmnguy's picture

Ha--that's pretty funny.  No, I'm not seeing any of the late 30's couples with a couple of kids moving into Whittier, Phillips or Cedar-Riverside, where most of the Somalis are.  I'm talking about Nokomis, Longfellow; even southern Powderhorn.

Because, to answer your question, no; the rich liberals do not want to hang with the Somalis.

forwardho's picture

You said the majic word HELOC.

Banks make a fortune off these, and while I am sure you will be prudent, many, many others will use this as a majic money card. Its great when the market goes up, but your on the hook and upside down when it falls.


newworldorder's picture

Zillow valuations are broken somehow;

Sold my home in October 2013. This month zillow has a price tag of $123k over the sale price. 2 homes in near vicinity to mine still on market for more than 10 months near my old price with no bids. Zillow shows them at the current listing price.

Many homes in my area have seen listing prices increased 10 to 40% from 2013 listings. Sellers seem to have caught the "recovery" fever. Buyers probably not so much. Was hoping to downsize to something smaller, but will wait for better prices. Renting is the best option now.

swmnguy's picture

Yes, but well before the actual house collapses, the Fed will have bought up the worthless derivatives the mortgage was bundled into.  So it's all money good, and good for the economy, see?  Because the finance industry never was interested in houses.  Just the loans.  And really, not even the loans. The trade in buying and selling side bets on the loans.  In a similar vein, Las Vegas really doesn't care who wins the Super Bowl.  They do care how many first downs in the second quarter, who does or doesn't cover the spread, etc.

Kaiser Sousa's picture

In an article published on Sunday, a Financial Times editor explains how the London Gold Fix could be structurally manipulated. An important “break through” for a mainstream media outlet to release this type of info, as it is a confession that the last market standing (gold and silver) is also manipulated, after having evidence that almost every other market appears to be manipulated (think of LIBOR, energy markets, aluminium, currency markets, credit derivatives, and so on).

In a myserious way, however, the article disappeared shortly after getting published. Too late for Google’s spider who already registered the article in its memory.

Google’s cache still has the article available. For archiving purposes, we release it through the screenshots below:

Courtesy of GATA for bringing this to our attention (source).

forwardho's picture

Thanks, being a firm believer in " He who controls the past, controls the future" don't care for The censoring of the internet is.

Everybodys All American's picture

Three separate comercial properties about a mile from my house have now been torn down and rebuilt as ... you got it banks. It's not like we don't already have a hundred of them now.

newworldorder's picture

Same in my neck of the woods. Fractional reserve banking requires that banks fight for the last deposit dollar remaining on every local market.

LMAOLORI's picture



Who will really take the losses?

Won't any decline in the value of these rotting foreclosed properties end up on the taxpayers balance sheet?

Bernanke Leaves Fed with Record Balance Sheet of $4,102,138,000,000


As of Feb. 1, 2006, when Bernanke took over as chairman, the Fed’s balance sheet indicated it owned $748,840,000,000 in U.S. Treasury securities. At that time, the balance sheet listed no mortgage-backed securities. As of Jan. 29, 2013, the balance sheet indicated the Fed owned $2,243,176,000,000 in U.S. Treasury securities and $1,532,224,000,000 in mortgage-backed securities.

glaucon was right's picture

After 26 months of consecutive gains... it is time to go bankrupt I think.

TheFreeLance's picture

By Q3 there is gonna be a massive run for the exits in single-fam speculation. It'll start in May as the spring buying season winds down.

skwid vacuous's picture

Larry Yun disagrees, best time to buy a house is RIGHT NOW!

Bangin7GramRocks's picture

It won't start until the Fed says so. Bow down to your puppetmaster and accept her ominscience. I wish it wasn't so, but I deal in reality and not some cuddly hologram of "market forces".

new game's picture

so the fed is going to buy 100 percent MBS of there tapering mix? for this to turn back around they need to manipulate the ten year to sub 2. not saying that it can't happen but right now a 2.5 handle wasn't achieved. if the stocks plunge you may see 2.5 but then confidence errodes and housing plunges like a banker jumping. either way it aint gonna happen this time around. the quiver is running out of arrows...

newworldorder's picture

I have always maintained that for long term recovery, there has to be job creation/availability  and household formation (marriages in the 20 and 30 years olds) generations. Without both of these conditions only the fast money coming into the "the glam cities" remains as the market drivers.

I bought my first home after 3 years of marriage and with a child on the way, moving into the home 2 months prior to the birth. There are simply not enough household formations happening with the capital and jobs to purchase homes listed at CURRENT PRICES,  relative to the wage structure.

KCMLO's picture

This is precisely where I am right now.  We have a baby due in May though a lease not expiring until September.  In St. Louis where I live we are looking at a very specific neighborhood where we're able to get into a 1900-ish built brick 4+ bedroom, 2,000ish sq ft for around $180,000.  While every realtor in the area jawbones "inventories are really critical right now" I see houses with nothing aside from the most cosmetic of repairs needed sitting on the market (and half of them sitting empty) for 3 or more months.  Even then the price action is very obviously downward with most of these places going for 20-30% below list price (and a good 15% or more off the Zillow estimate).  That part of St. Louis is completely broken.  I keep trying to convince my wife to wait it out til September though I will jump in for sure on a home in Compton Heights for $150,000 with only $10,000 in repairs and I know that's coming any day now with how completely fucked the market here is.

It is incredibly strange to see people not put their houses on the market because they think they won't get enough for them (and they're right) and to see tight inventories in this neighborhood and STILL the prices are dropping left and right.

NoDebt's picture

It's Harold Ramis movie line quote day on ZH.  Use your favorite quote from a Harold Ramis movie to respond to the article.

"What? Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!"  (Animal House)



the not so mighty maximiza's picture



I collect spores, mold and fungus



NoDebt's picture

Exactly.  You got the idea now.  If you can't figure out a quote from one of his movies that fits any given article on ZH, you've probably been living in a cave.

Animal house, Stripes, Caddyshack, Ghostbusters, Groundhog Day.... he did just about every memorable highly-quotable comedy movie that ever was (not Airplane, but pretty much everything else).

thamnosma's picture

No kidding, NoDebt.  He gave us a lot of pleasure over the years, going back to SCTV and from all accounts, a "real" person to boot.  

Beam Me Up Scotty's picture

We came, We saw......We KICKED THEIR ASS!!

Edit.....It was "its" ass, but I saw the movie a long time ago, lol.

Mr. Chairwoman's picture

Your honor, it's true... this man has no penis.

overmedicatedundersexed's picture

jewish lightning - bullish for fire equipment co's, and good for the economy, now what ins co's go bk with the payouts? - better call mr yellen for that first place in line at the discount window. ps to any large portfolio holders of repo's contact me at ..accidents R us.

yogibear's picture

Housing bubble #2.

Meanwhile Yahoo and Pimco are pumping housing.

It means Pimco has some heavy investments in the housing industry.


Caveman93's picture

No jobs = No Home. Simple to figure this one has played its course. Up next! No jobs = RECORD S & P!

Whoa Dammit's picture

Yep. Jobs gone = America gone, no matter how much the corpse is papered over by Wall Street.

greatbeard's picture

Good.  I'm in the market to buy and sell and I do best in a down market.  I hate overheated markets and the housing I was looking at was insane.  Fucking realtors all wanting you to get into a bidding war.  Not this homie. 

new game's picture

same exact experience. realtors are tools-like a vise grip that lost its ability to lock-fuck em is right.

NDXTrader's picture

The headline on CNBC: "US Home Prices Surge at Year End"

new game's picture

great news!! as potential cash buyer i want interest to rise and the momo to carry prices back down. two sellers right now. one that gets it and price to sell(10 percent discount from others with similar property) and sellers that will not sell and chase the price down and become shop worn...

patience!!!! cause rent is free while I wait(discount = savings ie free rent) 

the not so mighty maximiza's picture

Part timers should get together and buy a house too share

The Most Interesting Frog in the World's picture

The fascists are salivating over the potential 2nd coming of home equity bonanza - but it's looking iffy...  ohhh...what to do????

What do you do when students can no longer afford an education?  You print the fucking money and give it to universities so the lil ones can have something to do for four years.  Leave 'em with a debt they can never escape, even in bankruptcy.

This is next in housing, you watch, "free" money from the government - loan deferred - can't pay - market drops - non-dischargeable in bankruptcy - now they have the little bastards right where they want them!!!

forwardho's picture

I also have long wondered when .gov would forbid discharging. Just like student loans, they are the final backstop (well really We are) and will use that as causus belli for labeling morts as non- dischargeable.

Again, the definition of a slave is...

Save_America1st's picture

I'm in Tampa, FL which was mentioned above.  It's a total housing bubble here, because Blackstone was given billions to go around and buy up all the real estate in Florida.

This artificially created a boom and kept prices high.  Now they're the countries largest slum lord.  Not many regular buyers can compete with them as they caused prices to rise. 

The road to serfdom...lined by endless Blackstone rentals that nobody will be able to afford. 


‘Warehousing’ Homes

Blackstone has been purchasing through foreclosure auctions and short sales, in which banks agree to accept less than is owed on the mortgage, after more than 5 million homeowners lost their homes since the market’s peak in 2006.

It’s bought so quickly it’s “warehousing” more than half of the homes it’s acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said.


kenezen's picture

It's reported that while the securities issuance is going well the actual business is not.

Atlantis Consigliore's picture

Realtor shopping for Secret ware, slinky stuff,  walking the street,

she moans, RE  only goes up, buy bricks and mortar,  $ 100 Big Jane honey?

no?  ok smile, for you, $ 50 and an appraisal which shows  appreciation, Da FED says so,. 

Wait, her lips moving again, like Janets....more lies. 

LoneStarHog's picture

Why the hell don't we just lump all reporting into just ONE category and call them all The DUH Report?


D - Deluded

U - Unexpected

H - Hyped

thamnosma's picture

When hedge fund investors and "all cash" foreigners represent more than half the market, a bust is guaranteed.  The population can't afford the houses.

TruthHunter's picture

"The population can't afford the houses"

But the police won't let them live in tents and cardboard boxes.