June Case Shiller Confirms Home Price Declines Continued, Down 4.5% Y/Y, 0.1% Lower In June

The much delayed Case Shiller update for June is out, and it is both worse and better than expectations: year over year, the number printed at a -4.5% decline, slightly better than consensus of -4.6%, while the month over month change was -0.1%, on expectations of an unchanged print. Stripping aside the noise means that the housing market is crawling along the bottom after double dipping months ago but at least it is not imploding. And since this report is nearly 3 months old, it does very little to indicate what is actually happening with the economy.

From the report:

“This month’s report showed mixed signals for recovery in home prices. No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates. The National Index was up 3.6% from the 2011 first quarter, but down 5.9% compared to a year-ago,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Looking across the cities, eight bottomed in 2009 and have remained above their lows. These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit. These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.


“As with May’s report, June showed unusually large revisions across the same MSAs – Detroit, New York, Tampa and Washington DC. Our sales pairs data indicate that, once again, these markets reported a lot more sales closing in prior months, which caused the revisions. Since deed recording is usually county based, if the price trends across counties are very different, then delays from a subset of counties can lead to larger revisions. And data lag lengths tend to vary across the counties within a metro area. If counties with relatively stronger/weaker markets report sales with longer/shorter lags,  this will result in larger revisions as we receive the lagged data. Revisions are also likely to be larger when sales volumes are low or the proportions of distressed/non-distressed sales are changing rapidly. Any and all of these factors are likely contributing to the revisions we have seen over the past few reports.

“Nineteen of the 20 MSAs and both Composites were up in June over May. Portland was flat. Cleveland has improved enough that average home prices in this market are back above its January 2000 levels. Only Detroit and Las Vegas remain below those levels.”


The monthly change in the various MSAs that make up the Composite 20: biggest pain is in Portland, Phoenix, San Diego, San Fran, and Las Vegas, while an improvement was seen in Washington, Charlotte and Boston.

Full report

And here is Goldman's take:

BOTTOM LINE: Case-Shiller home price index declines slightly in seasonally adjusted terms, but rises sharply in not seasonally adjusted terms.

1. The Case-Shiller index of home prices in 20 metro areas falls by 0.06% on a seasonally adjusted basis in June, while the median forecast had looked for unchanged prices. Due to upward revisions in previous months, however, the 4.5% year-on-year decline is smaller than the median forecast. On a seasonally unadjusted basis, prices rose 1.1% month on month; we would put some weight on the n.s.a. numbers as there have been questions about the seasonal adjustment process in the Case Shiller data in the past.

2. The (seasonally-adjusted) home price index increases in about half of the metro areas, including large increases in Chicago (+1.32%), Washington DC (+0.95%) and Charlotte (0.86%). The largest declines are seen in Portland (-0.77%), Phoenix (-0.61%) and San Diego (-0.58%).