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Both the Case Shiller 10 & 20 city Home Price Indices rose 1% in June on a non-seasonally adjusted basis. S&P cautions that their seasonal adjustments are probably being distorted by seasonal factors that’s why I prefer to look at the NSA numbers. 18 out of 20 Metro areas recorded price rises with only Phoenix and Las Vegas recording price declines. Whilst that sounds good, it should be remembered that the Case-Shiller indices are an average of 3 months, thus the latest report is an average of April, May and June, the last 3 months of the tax incentives. As S&P notes;
Housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue.
We know sales fell off a cliff in July but it is not reasonable to think that the Case-Shiller indices will plunge when the July report comes out at the end of this month as that report will still include the months of May and June in the 3 month average. However, we should expect prices to stagnate and start falling as we progress into the 4th quarter.
Year over year comparables for both indices have been looking better however in the latest month, year over year increases reversed slightly, I would suggest that this reversal will be more abrupt in the coming months and that we will ultimately see year over year price declines in 12 months time. Of course, all bets are off if the government decides to intervene and prop up house prices yet again.
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