Yet Another Good Month for Housing?

BY Paul Solman  November 27, 2012 at 10:55 AM EDT

The suburbs of Las Vegas are one of the few areas where average housing prices stayed below their January 2000 levels. Photo by Allan Baxter via Getty Images.

Editor’s note | This post includes a correction at the end.

“Home prices rose in the third quarter, marking the sixth consecutive month of increasing prices.” Thus begins the press release for the monthly Case-Shiller housing numbers, which came out this morning for the month of September.

But wait a second, a skeptic might interject: Didn’t the rate of increase slow from the summer? Didn’t prices actually fall in Cleveland, Chicago, Charlotte, New York and even my own Boston? Yes, but “we are entering the seasonally weak part of the year,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices in this morning’s press release. “The headline figures, which are not seasonally adjusted, showed five cities with lower prices in September versus only one in August. In the seasonally adjusted data the pattern was reversed: one city fell in September versus two in August. Despite the seasons, housing continues to improve.”

  • To view a particular city, click Hide All and then select the city’s label.
  • Click and drag your mouse on the chart to zoom in on a particular span of time.
  • Use the box at top to choose your view: quarterly percent change, yearly percent change, monthly index value.

And backing up the statement, the data do indeed show that the average price of a house in the country’s 20 largest cities gained value — as measured by the prices house buyers paid — up 3.6 percent over last year and 2.2 percent from the second quarter of 2012.

Arguably, the most important impact of the Case-Shiller index is on overall economic sentiment. The first places to look, then, might be the markets and the media.

Unfortunately, scrutinizing at the public markets, it’s hard to separate out the effect of housing from every other factor affecting them. Case-Shiller was only one of three pieces of positive news this morning — a successful Greek bailout and gaudy consumer confidence numbers being the others. Yet the U.S. stock market is down a bit as I write (11 a.m.), allegedly due to “fiscal cliff” anxieties.

Prices not adjusted for inflation.

As for the media, they’ve been universally gung-ho.

Ruth Mantell of MarketWatch: “U.S. home prices rose in September for the sixth month, signaling that the housing market is in the midst of a recovery.”

Michelle Jamrisko of Bloomberg: “Home prices rose in the year ended in September by the most since July 2010, showing the recovery in the U.S. real estate market is a source of strength for the economy.”

The AP: “Home prices rose in August in nearly all American cities, and many of the markets hit hardest during the crisis are starting to show sustained gains. The increases were the latest evidence of a steady housing recovery.”

Tess Stynes in the Wall St. Journal: “U.S. home prices rose in September from a month earlier, adding to signs of a housing-market recovery.”

What might a skeptic say to all that? He or she might point out that prices are only back where they were in mid-2003.

How might Pollyanna or Dr. Pangloss counter? All the more reason to buy now.

Interactives by Justin Myers.

Correction | Reporter Ruth Mantell of Marketwatch called to (rightly) point out that my excerpt from her housing story on Tuesday’s Case-Shiller numbers was too selective, and wrongly cast her as one of the “universally gung ho” media in my post. The housing market “in the midst of a recovery,” attributed to her, was a quote from the Case-Shiller press release, which she made clear, and she ended her short story with a “however”:

“However, while persistently low mortgage rates are attracting some buyers, consumers still face tight credit standards, and officials say factors such as tight lending terms will block a powerful housing recovery. Indeed, despite recent gains, prices are about 30 percent below peak levels in 2006, according to Case-Shiller data.”

Apologies.
-Paul Solman