To people like me who track real estate for a living — I’m a real estate agent as well as a journalist — there’s no good solid data on home prices. Every index is flawed, one way or another. The National Association of Realtors, for example, is considered an industry cheerleader and too optimistic. By contrast, the most closely watched data set, the S&P/Case-Shiller Home Price Index, is often considered too lagging. For example, last month there was a ton of positive real estate news, but Case-Shiller still came in fairly bleak. The FHFA house price index, for example, a Federal government-generated number, was up 2.7% last month, year-over-year, while Case-Shiller was down 2.6%.
As a result, I’ve come to think of Case-Shiller as the glummest guest at the party, a sort of “Eeyore Index.”
Because of that, a turn in Case-Shiller from grim to glad seems to carry extra weight, and that’s what happened this month with the numbers released this morning. Home prices, adjusted for seasonal variations, rose 0.7% in April from the month before. March, which had been reported as an unimpressive 0.1% gain, was revised upward to 0.7%. The index follows twenty cities, and positive gains were reported in 19 of them. Atlanta, which has watched the bottom dropping out of its housing market for more than a year now, reported a gain of 0.8%, even after seasonal adjustments. Drinks for everybody!
The party starts in Phoenix, where prices are up 8.6%, year-over-year. (Housing prices are extremely seasonal, with many markets being hotter in the spring, so seasonally adjusted or year-over-year data is more important than month-to-month). From last year, Minneapolis is up 3.8%, Denver and Dallas are each up 2.8%, Washington, D.C., is up 1.6%, Charlotte and Tampa are up 0.8%, and Boston up 0.1%. Just as important as the jumps is the geographical spread of those numbers: recovery in the West, recovery in the South, recovery in Florida.
Coming on the heels of another positive data announcement — that new home sales rose 7.6% in May, their fastest annual jump in two years — this is decidedly good news for the housing market.
Of course, Case-Shiller’s not completely positive (by its nature, I’m not sure that it will be for another few months). Year-over-year, the 20-city price index still dropped, down 1.9%. But that rate of decline is slowing, with this being the smallest drop in a year and a half, indicating that housing prices are starting to shake off their six-year slump.
The foreclosure crisis, too, is an ongoing worry. Are we in a recovery because there are fewer foreclosures for sale, and will those floodgates open again?
In a couple of specific markets, maybe. But the monthly news coming in from such traditional trouble spots as Vegas (up 0.9% in April from March), Miami (up 1.2% in April from March) and California (San Diego, San Francisco, and L.A., all up, 0.7%, 1.5%, and 1.1%, respectively!) indicates that a lot of distressed inventory has been processed already.
It’s nice to see Eeyore cracking a smile.