- by New Deal democrat
This morning's Case Shiller report for June showed prices in the 20 city composite rising YoY for the first time since 2007, with the exception of a few months during the $8000 home buying tax credit in 2010. Prices were up +0.5% YoY, and were also up +0.9% month over month from May to June on a seasonally adjusted basis. This is the fifth straight month of seasonally adjusted price gains. In other words, this increase in no way is a reflection of seasonal buying patterns. It is confirmation that housing prices bottomed earlier this year.
But the Case Shiller index is only one house price index. There are a dozen such indexes, all relying on different methods. There are asking prices indexes, median and mean sales price indexes, and repeat sales indexes. Within each type there are seasonally adjusted and non-seasonally adjusted metrics. Back in April I reported on slew of house price indexes, and concluded that March may have marked the turn in the market. With the Case Schiller index turning positive YoY, now is a good time to check those indexes again. Do they contradict the Case Shiller turning point, or do they confirm it?
Let's look at each of the three groups of indexes - list prices, mean and median prices, and repeat sales indexes - in turn.
The theory here is that sellers have to price to meet the market. If they are doing so, then the trend in list prices will lead the trend in sales prices, since sales are consummated months after the property is listed. There are three of these, two non-seasonally adjusted and one seasonally adjusted.
Housing Tracker is a non-seasonally adjusted index of 54 markets with data back to the peak of the housing bubble. This index began turned positive on a YoY basis last December and has remained positive ever since. Yesterday they reported that asking prices continued to be positive YoY by +2.0%.
The NAR recently began to publish its own a non-seasonally adjusted index made up of all of its listings. The NAR's index showed that asking prices were still negative, down 2.5% in December 2011, but turned positive YoY by February, up 6.82%. Their report for July showed prices flat from June, and up 2.6% YoY.
Earlier this year the Trulia asking price index debuted. This is a seasonally-adjusted index. In their inaugural report for March 2012, they indicated that asking prices had bottomed in January. Their July report showed that prices had now risen for 6 months in a row. The most recent monthly advance was +0.5%, and prices are now up YoY by 1.1%.
Median and mean sales prices
There are three of these indexes. The first only takes into account new home prices. None are seasonally adjusted, so we have to look at YoY trends.
Each month the Census Bureau reports on new home sales. The report includes both mean and median home prices on a non-seasonally adjusted basis. Both the YoY median and mean prices turned positive in February and remained positive in March. This continued through May. In their July report, they show prices down -2% YoY.
The NAR's existing home sales report also includes sale prices. According to the NAR, sales prices for existing homes on a non-seasonally adjusted basis turned positive YoY in March. Their July report indicated that sales prices for existing homes were up for the fifth month in a row. and were also up 9.4% YoY.
Radar Logic is another non-seasonally adjusted index of sales, based on prices paid per square foot. They reported earlier this month that prices had turned up +2.0% month over month from April to May and also +0.7% YoY.
Repeat sales indexes
There are six sources of repeat sales and other indexes which control for price or quality of house. The first is not seasonally adjusted, so we must look YoY. The other 5 are seasonally adjusted, so a turn in trend can be spotted without waiting for the YoY metric to turn.
CoreLogic makes use of repeat sales transactions to create a House Price Index which is not seasonally adjusted. Excluding distressed sales, month-over-month prices increased 0.7 percent in February from January. This trend has continued, as for June their House Price index was reported up 2.0% month over month, and 3.2% YoY.
The FHFA, which gathers seasonally adjusted house prices, reported a month over month gain of 0.7% in June and YoY gain of 3.6%".
FNC is not actually a repeat sales index but FNC "has developed a hedonic index based on the data collected from public records and blended with data from appraisals." It is reported for 10, 30, and 100 metropolitan areas. In their most recent report, for June the index was up for the fourth consecutive month, up 1.1% month over month non-seasonally adjusted. Further, their hedonic repeat sales index was down only -0.2% YoY. The index was down -0.6% in April, and =0.4% in May. If the trend this year continues, their report will turn positive YoY in the August report if not in July's.
Lender Price Services (LPS) has a House Price Index which controls for houses for sale in a variety of price brackets in order to avoid problems with the median result based on the mix of houses for sale. Their last report of August 3rd showed that house prices were up 0.9% month over month and up 3.2% YoY.
Finally, Zillow has also started reporting its own index of house prices. For July, they reported that prices had turned positive YoY for the first time since 2007, up +1.2%. This was the eighth consecutive month of price gains in that index. Prices in July rose +0.5% from June.
At this point, every single asking price index has turned positive. So have mean and median sales prices of existing homes as reported by both the NAR and Core Logic on a non-seasonally adjusted basis. Since both of these have turned positive YoY, it is not a matter of seasonality. So have 5 out of the 6 repeat sales indexes, including Core Logic, FHFA, Lender Price Services, Zillow, and as of this morning on a YoY basis, Case Shiller. Only the FNC repeat sales index, which is down -0.2% and likely to turn positive YoY within a month or two, and the very erratic Census Bureau mean and median new home sales price index, are not positive on a seasonally adjusted or YoY basis.
In June of 2011, relying on Housing Tracker's stabilizing asking price data, I wrote that:
To put it bluntly, an examination of the newly available aggregate US asking price data from Housing Tracker contradicts the conventional wisdom above that, as "the housing market ... ha[s] another 15% downside to go," and that "reasonable expectations for asset price stability, if not appreciation [a]ppears unlikely to happen any time soon."While the permabear Doomers will stamp their feet, the simple fact is that there is now overwhelming evidence that the housing market has bottomed exactly when I said it would. The only question now is whether it is a long term bottom, or whether it might still be undone by the long-fabled but yet to appear foreclosure tsunami.
To the contrary, housing prices have already "faced the brunt of market forces" without support for a full year, as a result of which they have been falling closer and closer to equilibrium, the rate of decline is abating, and actual real time data shows that nominal if not inflation adjusted stability may indeed be reached as soon as early next year.