Latest Case-Shiller index shows home prices essentially stable

I’m sure there’s going to be some confusion in the reporting of the Case-Shiller data released today for June (which is a composite of three months: April, May, June).

Given the turmoil in the housing market in recent years and the distortions caused by government policy, Case-Shiller uses not seasonally adjusted (NSA) data as the focus of its news releases. I suspect, however, that Case-Shiller will soon decide to place more emphasis on the seasonally adjusted (SA) data, like it used to, now that we’re more than a year past the expiration of the homebuyer tax credits.

Like other areas of the economy, home prices are seasonal. All other things being equal, they tend to increase in the period of high demand in late spring and early summer, and they decrease at times of lowest demand.

For example, Case-Shiller’s national index for the second quarter was released today. The NSA data for the national index was 130.12 for Q2, well up from 125.55 in Q1. (Keep in mind that the national index first hit 130 in Q1 of 2003.) The SA data for the national index, on the other hand, is 129.19 for Q2, up a tiny bit from 129.09 for Q1.

The best news in today’s release is that less expensive homes have gone up slightly, even accounting for seasonality. More expensive homes have fallen in value, however. I’ll have more about that later.As I have looked more closely at the data, I see that I have overstated the case in that sentence. There are considerably different patterns from city to city, although my earlier statement is true for Atlanta. In Atlanta, the seasonally adjusted prices for the lowest tier (under $130,356) have been pretty noisy over the last couple of years — probably a result of tax credits and a lot of distressed sales — but the June index (a composite of April, May, and June) was up 4.5% in June. Prices for the middle tier ($130,356 to $241,832) were flat and prices for the upper tier (above $241,832) fell slightly.

Here’s another graph from Calculated Risk showing the recent history of home values for the 20 cities that are used for one of its composite indexes.