Tuesday, July 29, 2008

Housing Continues to Improve

What you will here when you read or watch the mainstream news today is that housing prices declined 16% in major markets since last year. This will be based on the new S&P Case Schiller Index numbers realeased today and available here.

What you are unlikely to hear is that the home price situation is improving and that the worst is well over. During the last year home prices on the index have shrunk every month. However, the rate at which prices are declining has begun to improve significantly in recent months. The chart below shows that rate of change.

It should also be noted that once again this month 7 of the 20 markets actually saw price gains. It is my opinion that 9 of the 20 markets have either hit bottom or are increasing.


dark1p said...

Your analysis seems to be driven by ideology. No market goes straight down. Declines are a series of declining legs interspersed with bounces, some of which can be dramatic. However, you can proudly add your name to a list of economists, NAR spokesmen, politicians and others who have enjoyed calling a housing bottom every month during the past two years.

Brian Shelley said...

Driven by ideology?

Normally I would agree with you, but in this case I'm not sure which agenda you claim I am pushing.

I just think newsmen are trying to sell papers by speciously concentrating on year-to-year comparisons. Year-to-year numbers have their place to smooth out seasonal trends. But, I see no seasonality to the Case Schiller data and thus it is completely unnecessary to look at them in that way. Month-to-month comparisons show the real story as to what is going on.

P.S. If you know of a prediction market that I could put my money where my mouth is, please let me know.