What a difference Seasonally adjusted and Unadjusted data makes: for the best example look no further than the just released latest Case Shiller index, where the Seasonally Adjusted 20 City Composite Index grew by a less than expected 0.76% (Exp. 0.80%), down from the 0.80% last month, and the Year over Year price also missed expectations of a 13.00% increase, printing slightly less at 12.86%. However, while the well-delayed February data was a modest miss across the board, more importantly it represented that there has been price increases for 24 consecutive months. One gets a very different story if one looks at the NSA data, where Y/Y prices increased the same, or 12.86%, however on a sequential basis, prices have now declined for 4 months in a row - the longest negative stretch in actual home prices since March 2012.
What's worse, even Case Shiller itself appears to have given up on housing as the driver of the wealth effect: "Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing. Long overdue activity in residential construction would be welcome, but is certainly not assured."
Here is the quite attractive Seasonally Adjusted data:
And the not quite so attractive Unadjusted data:
And some color from the February Case Shiller report itself:
“Prices remained steady from January to February for the two Composite indices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The annual rates cooled the most we’ve seen in some time. The three California cities and Las Vegas have the strongest increases over the last 12 months as the West continues to lead. Denver and Dallas remain the only cities which have reached new post-crisis price peaks. The Northeast with New York, Washington and Boston are seeing some of the slowest year-over-year gains. However, even there prices are above their levels of early 2013. On a month-to-month basis, there is clear weakness. Seasonally adjusted data show prices rose in 19 cities, but a majority at a slower pace than in January.
“Despite continued price gains, most other housing statistics are weak. Sales of both new and existing homes are flat to down. The recovery in housing starts, now less than one million units at annual rates, is faltering. Moreover, home prices nationally have not made it back to 2005. Mortgage interest rates, which jumped in May last year and are steady since then, are blamed by some analysts for the weakness. Others cite difficulties in qualifying for loans and concerns about consumer confidence. The result is less demand and fewer homes being built.
“Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing. Long overdue activity in residential construction would be welcome, but is certainly not assured.”
Finally, the data breakdown by city, where 13 of 20 cities saw their prices decline:
Only five cities saw their annual rates improve in February. After posting annual gains of over 20% for their twelfth consecutive month, Las Vegas and San Francisco both showed deceleration in their annual rates. San Diego narrowed the gap with a return of 19.9%. Washington D.C. recorded its eight consecutive improvement with an annual rate of 9.1%, its highest since May 2006.
Thirteen cities declined for the month of February. Cleveland and Tampa showed their largest declines of 1.6% and 0.7% since January 2012. Seattle improved from a decline of 0.8% in January to an increase of 0.6% in February. Denver posted a small decline and is less than one percent away from its peak set in September 2013. Dallas increased 0.2% and continues to reach new index highs. Detroit remains the only city below its January 2000 level.