The S&P Case Shiller home price index shows a -3.9% decline from a year ago over 20 metropolitan housing markets and a -3.3% decline for the top 10 housing markets from September 2010. Home prices are back to Q1 2003 levels.
Below is the yearly percent change in the composite-10 and composite-20 Case-Shiller Indices. These are not seasonally adjusted, but comparing from September 2010.
Wondering why we have conflicting news headlines on the S&P Case-Shiller Housing Index? Because some in the press use the seasonally adjusted data and others do not. To make matters worse, some compare the not seasonally adjusted monthly results and others the housing price index in comparison to one year ago.
The seasonally adjusted change in home prices was -1.2% from Q2 to Q3, yet S&P is reporting the not seasonally adjusted change, which was +0.1% between quarters.
This month the not seasonally adjusted August to September change for the composite-20, -0.6%, was the same as the seasonally adjusted rate. The same is true for the composite-10, both the seasonally adjusted and not seasonally adjusted monthly change was -0.4%. Intuitively, the convergence of the seasonal adjustments in September makes sense, it's the winding down of the housing season.
The above graph shows the composite-10 and composite-20 city home prices indexes, seasonally adjusted. Prices are normalized to the year 2000. The index value of 150 means single family housing prices have appreciated, or increased 50% since 2000 in that particular region. These indices are not adjusted for inflation. The composite-20 index, seasonally adjusted is 139.49 and comparable to April 2003 levels (ignoring 2009). Not seasonally adjusted the composite-20 index is 141.97, equal to June 2003 levels. This quote from the report about sums up the situation:
Over the last year home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy.
The S&P/Case-Shiller Home Price Indices are calculated monthly using a three-month moving average and published with a two month lag. Their seasonal adjustment calculation is the standard used for all seasonal adjustments, the X-12 ARIMA, maintained by the Census.
So, why would S&P report the not seasonally adjusted data? According to their paper on seasonal adjustments, they claim the not seasonally adjusted indices are more accurate. Why? It appears the housing bubble and bust has screwed up the cyclical seasonal pattern. What a surprise.
The turmoil in the housing market in the last few years has generated unusual movements that are easily mistaken for shifts in the normal seasonal patterns, resulting in larger seasonal adjustments and misleading results.
Not seasonally adjusted data creates more headline buzz on a month by month basis. S&P does make it clear that data should be compared to a year ago, to remove seasonal patterns, yet claims monthly percentage changes should use not seasonally adjusted indices and data. This seems invalid for housing markets are highly seasonal. Below are the seasonally adjusted indices for September 2011.
For September 2011, the S&P/Case-Shiller Home Price indexes shows 18 of the 20 cities tracked are down for the year. Detroit, had the best yearly increase, 3.61%, but bear in mind they have been hammered. Atlanta is down -9.75% from a year ago.
Below are all of the composite-20 index cities yearly price percentage change, using the seasonally adjusted data.
Calculated Risk, has additional custom graphs and data analysis and is the uber site for residential housing, with valid statistical analysis.
In a separate report on shadow inventory or houses being kept of the market, S&P says it will take 45 months to clear it all off the market. Shadow inventory is $384 billion. One of the wildest numbers from the shadow inventory report is the New York metro area. NYC has 155 months worth of shadow inventory being kept off the books.
Foreclosures increased 1% in Q3:
Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 610,337 properties in the third quarter, an increase of less than 1 percent from the previous quarter and a decrease of 34 percent from the third quarter of 2010. The report shows one in every 213 U.S. housing units with a foreclosure filing during the quarter.
Corelogic reported reported 22.1% of all homes have negative equity.
Negative equity data shows 10.7 million, or 22.1 percent, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011. This is down slightly from 10.9 million properties, or 22.5 percent, in the second quarter. An additional 2.4 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the third quarter.
S&P does a great job of making the Case-Shiller data and details available for further information and analysis on their website.