5th Consecutive Month Of House Price Drops As Case-Shiller Misses Expectations Again

The bottom-calling will continue of course but for the fifth month in a row, September's Case-Shiller home price index fell year-over-year as the Non-seasonally adjusted price index fell for the first time month-over-month since February. The overall index dropped 3.9% YoY, compared to expectations of a 3.1% drop. The more narrowly focused 20 City Index also missed expectations, falling 3.59% (relative to expectations of -3.00%). The index value is back below 142 (back at 2003 levels), its lowest in 3 months, as prices muddle along the bottom here with the mix most likely holding us from a more vertical drop. We assume the second derivative crowd will note the -3.9% drop is slower than the -5.79% drop of Q2, but October and November have been tumultuous months and we suspect the acceleration top the downside will revert - especially given recent rises in delinquencies to record highs.

Seasonally adjusted, the 3-month annualized national index is -4.74% (reverting to a drop after Q2's modest gain). The 20-City seasonally adjusted index saw its biggest drop in six months as it drops back to 2003 levels.

Goldman's less than sanguine perspective is hardly going to help sentiment:

Weaker than Expected
BOTTOM LINE: House prices declined more than forecast in September.

KEY NUMBERS:
Case-Shiller 20-city index -0.6% (mom) for September vs. GS +0.2%, median forecast -0.1%.

MAIN POINTS:
1. The Case-Shiller 20-city house price index declined by 0.6% (month-over-month, seasonally adjusted) in September, a larger drop than expected by the consensus. Estimates for earlier months were also revised lower. On a year-over-year basis, prices were down 3.6%. The seasonally adjusted version of the index fell to a new low for the cycle, and prices are now at their lowest level since April 2003 (the non-seasonally adjusted version of the index is still slightly above lows reached in the spring months of 2009 and 2011).

2. Results were mixed across regions. Prices fell sharply in Atlanta (-4.1% mom, seasonally adjusted), and declined in 15 of the 20 cities in the index. House prices continued to rise in Washington DC, where the index is up 1% year-over-year.

Chart: Bloomberg

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