Case-Shiller Indices Show continued home price fade

There’s something afoot 

In a press release dated October 28th, 2014 from S&P Dow Jones Indices, the company announced that the S&P/Case-Shiller Home Price Indices, which are a leading measure of US home prices, continue to show signs that current housing values are slowing in many markets.

The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20- City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.1% annual gain in August 2014. The 10- and 20- City Composites posted year-over-year increases of 5.5% and 5.6%. 

“The deceleration in home prices continues,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Sun Belt region reported its worst annual returns since 2012, led by weakness in all three California cities -- Los Angeles, San Francisco and San Diego. Despite the weaker year-over-year numbers, home prices are still showing an overall increase, as the National Index increased for its eighth consecutive month. 

The folks at zerohedge.com have an interesting take on the housing market and how they see indices evolving in San Francisco, which they say is often seen as a bellwether financial community .

The site asked the following question:

So, has the global coordinated credit bubble burst? Judging by stocks, which just traded at their all time highs, ironically based on housing data from the West not yet. As for the wealthiest buyers of homes, usually the best leading indicator of easy financial conditions: they appear to be quietly putting up for sales signs in front of their bay area mansions.

Looking to the San Francisco housing market, Case-Shiller indices showed that the Northern California city posted 9% annualized price growth in August, down from its double-digit return of 10.5% in July. If this slide continues, we’d guess we’ll be looking at numbers below 5% by mid 2015. 

The following chart is from June of 2014

Based on data from mid 2014

Based on data from mid 2014

Based on data from late 2014

Based on data from late 2014

There are three ways to look at this data:

  1. It means nothing for the South Bay market, which continues to increase

  2. We’re headed into a yet to be announced housing bubble

  3. The data represents a healthy, stabilizing market

We’re hoping for the third option. 

Blake Roberts