June 2008 Case Shiller Housing Index Falls 15.9%

Wednesday, August 27, 2008 | 08:30 AM

A belated post on yesterday's Case Shiller release:

Through June 2008 the  S&P/Case-Shiller Home Price Indices showed "continued broad based declines in the prices of existing single family homes across the United States, a trend that prevailed throughout 2007 and has continued through the first half of 2008."

The month-to-month drop was slightly better than expectations, dropping 0.5% versus the 0.8% consensus forecast. As the chart below shows, the index experienced its greatest year-over-year price drop at -15.9%:


Source: Standard & Poor's


Negative contributions came from all of the usual suspects: Phoenix, San Francisco, Miami, Las Vegas and San Diego, all of which are down anywhere from 23%-30% YOY. 

Note that the lack of accelerating price drops does *not* intimate accelerating price gains. Inventories remain elevated and foreclosures are only increasing.

What is the opposite of Cassandra? She was the cursed prophetress who had the ability to foresee the future, but an inability to convince anyone of the coming dangers. With housing, the usual cadre were once again calling the bottom. They are the anti-Cassandras -- have a distinct inability to see the future (we've documented this all too many times) yet for some inexplicable reason, there seems to be a swath of people eager to lose money (again) believing them. It truly is astonishing to watch the lambs get led to the slaughter month after month by the same siren call. (Note that the perennial bottom calls is the basis for our guest post by Mark Thoma later this morning).

Dan Greenhaus of the Equity Strategy Group at Miller Tabak notes that "Like a bad hangover, time is the best medicine to help work through the glut of housing."  We agree.


National Trend of Home Price Declines Continued through the First Half of 2008 
S&P, August 26, 2008

Wednesday, August 27, 2008 | 08:30 AM | Permalink | Comments (12) | TrackBack (0)
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New home sales bounce in July was less than impressive

Many commentators seemed to turn a bit euphoric over the new home sales number that was released yesterday, but here are the facts, as we see them, beneath the headlines: The pundits are happy because new home sales appear to be bottoming out. Well, it is probably true that they are no longer sliding at an accelerating rate, but because of the downward revisions to May and June, the bounce in July (+2.3% to 515k) was less than impressive, in our view. The average of the past three months in this notoriously volatile indicator otherwise known as new home sales is 511,000, which is the weakest since September 1991. Adjust for size of the population, and home sales are at their lowest level since the summer of 1982 when the economy was trying to pull out of the worst recession of the post-war era.

Improvement in sales seems to be of the ‘spec’ variety Digging beneath the surface, sales have been concentrated in “units not yet started”, which rose 9% (caution: these data are not seasonally adjusted). So, all this improvement in sales seems to be of the ‘spec’ variety. Sales of “units under construction” were flat on the month. But sales of completed product plunged 18% and, yes, while the data are not adjusted for seasonal vagaries, this still went down as the second weakest July in the past twenty years.

Posted by: David Rosenberg | Aug 27, 2008 8:56:13 AM

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