Case-Shiller Home Price Indexes Up in May

Standard and Poors -- The 10-City Case-Shiller Home Price Composite Index increased in May by 5.4% and the 20-City Composite Index increased by 4.6% compared to May 2009 (see chart above). This marks the fourth consecutive monthly increase in the Case-Shiller Home Indexes compared their year-ago levels, following more than three years (37 months) of consecutive monthly decreases.

On a monthly basis, 19 of the 20 metro areas and both composite indexes increased in May from April, by 1.2% for the Composite-10 index and 1.3% for the Composite-20 index. Commentary from Standard and Poors follows:

“While May’s report on its own looks somewhat positive, a broader look at home price levels over the past year still do not indicate that the housing market is in any form of sustained recovery,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Since reaching its recent trough in April 2009, the housing market has really only stabilized at this lower level. The two Composites have

improved between 5 and 6% since then, but this is no better than the improvement they had registered as of October 2009. The last seven months have basically been flat.”

“The May 2010 data for 15 of the 20 MSAs and the two Composites show an improvement in annual returns compared to April’s report. With the month-over-month data, while 19 of the 20 MSAs and the two Composites were positive, we are in a strong seasonal period for home prices, so that was largely expected. In addition, there may still be some residual impact from the homebuyers’ tax credit, since they affect any purchase that closes through June 30th 2010. We need to watch where the housing markets will go after these temporary stimuli go away. June’s existing and new home sales and housing starts data do not show much real improvement in those statistics either. It still looks possible that the housing market might bounce along the bottom for the foreseeable future, before showing any real improvement that will filter through to the rest of the economy.”

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