Case Shiller Says Home Prices Dropped Less Than Expected Three Months Ago

There was some good news for the home sector after Case Shiller the first sequential increase in home prices in almost a year, with the Composite 10 increasing 0.8% in April, and a 0.7% increase in the Composite 20 on a non-seasonally adjusted basis. On a SA basis prices fell again, this time by 0.1%, slightly better than consensus which was looking for a 0.2% drop (and lest anyone believes revisionism is contained to the BLS, the February/March decline was revised even more from -0.23% to -0.26%) and in line with Goldman's expectation noted earlier.  But before Toll and Lennar go ahead and prebuild another 10,000 empty units, there were some caveats: "In a welcome shift from recent months, this month is better than last - April’s numbers beat March,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather...“Other housing statistics show the same trends. Single-family housing starts were up in May, but still well below their 2010 levels and still very close to their 30-year low. Existing home sales rose in May, but are still about 15% below last year’s pace and about 35% below their 2005 pace. While foreclosures remain a large factor in most parts of the country, the S&P/Experian Consumer Credit Default indices show a small decline in the pace of new defaults since last November. Other reports confirm that banks have tightened lending standards in the past year making it harder to qualify for a mortgage despite very low interest rates." Lastly, and perhaps most important, is that this is data that was relevant back in April... and that 6 out of 20 MSA just hit new lows. America is increasingly becoming a story of two polar opposites.

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