Case-Shiller Indices Show Strongest Gain Since 2006

Case-Shiller Indices Show Strongest Gain Since 2006

05/28/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Home prices posted their strongest yearly gain in almost seven years in March, with both the 10- and 20-city indices seeing double-digit gains, according to the Case-Shiller Home Price Indices released Tuesday. The national index, reported quarterly, was up 10.2 percent.

From February to March, prices increased in 15 of the 20 cities surveyed, falling in two and staying flat in the remaining three.

Economists had forecast the 20-city index would rise slightly to 147.6, an increase of 0.7 percent for the month and 10.1 percent over March 2012.

Month-over-month, the 10- and 20-city indices improved 1.4 percent in March, the fastest gain for each index since last July. The national index advanced 1.2 percent for the quarter.

The 10- and 20-city indices have improved year-over-year for 10 straight quarters, the first time that’s happened since 2006. The quarterly index has improved year-over-year for four straight quarters, also for the first time since 2006.

The Case-Shiller surveys covered the same month for which the National Association of Realtors reported the median price of an existing single family home rose 6.2 percent.

The three cities that showed no growth (and one of the cities in which prices fell for the month) were in the Midwest, indicating continuing struggles in the region.

Nonetheless, the March report was an improvement over February, when prices rose in 11 cities while falling in eight. The three Midwestern cities in which prices were flat in March—Chicago, Cleveland and Detroit—had seen price declines in February.

The price drop in Minneapolis in March, 1.1 percent, was steeper than the 0.8 percent in February. New York was the only other city in which prices fell in March, dropping 0.4 percent after increasing 0.4 percent in February.

Chicago and Detroit each saw declines in household employment in March, while in Cleveland and Minneapolis, employment barely grew.

Monthly price gains were led by San Francisco, where prices grew 3.9 percent to their highest level since July 2008. Prices increased 3.0 percent in Seattle to the highest they’ve been since August 2010. Las Vegas and Portland, meanwhile, each saw 2.7 percent gains (to their highest levels since May 2009 and August 2010, respectively), while Tampa experienced a 2.6 percent improvement (to its highest level since October 2009). Finally, prices also rose in Charlotte to a level not seen in years (a 2.4 percent gain to the highest point since December 2009).

Every city surveyed showed annual price gain, led by Phoenix, where prices grew 22.5 percent; San Diego (up 22.2 percent); Las Vegas (up 20.6 percent); Atlanta (up 19.1 percent); and Detroit (up 18.5 percent).

Overall, the 10-city index rose to 161.48, its highest level since August 2010, while the 20-city index improved to 148.65, also the highest level since July 2010. It was the fourth straight month-over-month gain for each index.

While the report showed national strength, there were some regional weaknesses. Prices failed to grow in Chicago after six straight monthly declines; they dropped in Minneapolis for the third month in a row, and in New York, the price drop was the sixth in the last seven months. The price increase in Washington, D.C., was the first after six straight months of decline.

The report, however, showed a steady improvement in prices in the West. Prices have increased in Phoenix for 18 straight months, in Los Angeles and San Francisco for 13 straight months, and in Las Vegas for 12 straight months.

The 10-city index is down 28.6 percent from its June 2006 high of 226.29, and the 20-city index is off 28.0 percent from its July 2006 peak of 206.52.

Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 a.m. Eastern.

 

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