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Optimism in Latest U.S. Home Prices

Model home in Phoenix metropolitan area. *Real estate agent Diane Olson opens the sliding glass door of a model home in Gilbert, Ariz. “[Phoenix] was one of the hardest hit cities in the collapse, and prices are still more than 50 percent below their June 2006 peak, but the past five months have been positive for that market,” David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, said. Photo by Laura Segall/Bloomberg via Getty Images.*

Making Sense

Tuesday morning’s news features a few economic downers: U.S. consumer spending is flat, as Americans save more; unemployment in the eurozone has reached new peaks. But on the U.S. housing front, the latest Case-Shiller numbers are in, and from April to May, all signs are positive. For the first month in recent memory, all 20 cities in the Case-Shiller index saw an increase in prices, even bedraggled Detroit.

  • 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.

Reaction from the usual sources (New York Times, Wall Street Journal, Financial Times) isn’t in yet as I’m writing this. Only Bloomberg has commented, and with a curiously temperate headline: “Home Prices in U.S. Fell Less Than Forecast in Year to May.” The meaning: from last May to this one, “year over year,” prices are still down. Considering that last month prices were revving up in every market but Motown, however, and that this month even Detroit is no longer in reverse, a bit more optimism may be in order. How about: “U.S. Home Prices Up Everywhere for Second Month in a Row (even Detroit)”? To the extent that recoveries are self-fulfilling prophecies, accentuating the positive might be just what the economic doctors ordered. Assuming, of course, that two months makes a trend. And, in the spirit of even-handedness, there was a rally in prices in 2010. It sure fizzled.

Prices not adjusted for inflation.

Where are prices in the larger scheme of things? Back to 2003 levels, which, incidentally, is when we ran our first story on the possibility of a housing bubble. We ran our second one in November of 2006 featuring one of the first TV appearances by the man subsequently known as Dr. Doom: NYU economist Nouriel Roubini. Unfortunately, the grim doctor continues to have a grim prognosis for the U.S. and world economies.

Interactives by Justin Myers.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions

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