Here Is Goldman's Spin On The Case Shiller Drop

BOTTOM LINE: Case-Shiller index falls to new low for housing downturn. Month-over-month declines smaller than in late 2010.


1. The Case-Shiller house price index fell by 0.2% mom on a seasonally adjusted basis (-0.8% unadjusted), or 3.6% yoy. The level of the index fell to a new cycle low, and now indicates a peak-to-trough decline in house prices of at least 33.1%.

2. House price trends were mixed across regions. Washington DC remained the best performer, with price gains of 1.2% mom (seasonally adjusted) or 8.1% yoy. San Francisco, Miami, Seattle and Los Angeles also saw significant month-over-month gains in prices. In contrast, prices remained quite soft in Charlotte, Minneapolis, Cleveland and Atlanta. Prices in Minneapolis were down 20% from a year earlier.

3. Despite another month-over-month decline and a new low for the index, we are cautiously optimistic about the near-term outlook for house prices. First, while prices are still falling, declines are now substantially smaller than in late 2010. For example, in the three months to October the decline in the seasonally adjusted index was an annualized 10%. In the three months to March the annualized decline was about 3%. Second, the weakness in house prices appears concentrated in distressed sales. The Core Logic house price index-which allows us to divide prices into distressed and non-distressed-shows relatively firm prices for conventional sales.

Well, millions of underwater squatters just breathed a sigh of relief at this wonderful news.


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