On September 25 Case-Shiller released their latest price index results. The 10 City Index showed a slight 0.6% rise YOY. This was the sixth straight month of improvement, leading many “analysts” to predict a turn around in housing. Here’s what the long term YOY chart looks like:
Back in 2005 it was easier to see where the price trend was going. While it was hard to tell when the bubble would pop and how badly, it was clear that prices had gone too far from the mean to be sustainable. At the moment, however, not only are we close to an inflection point, there are a number of factors which could radically alter price trends. Events in Europe and the banking world make it difficult to determine how long lenders will carry inventory on their books. A weak job market and low consumer confidence are also making the call difficult.
I must say though, I had to laugh at how the folks at Case-Shiller chose to say, “We haven’t got a clue as to where prices are headed at this point”:
The upshot for Shiller and his colleagues is that while “a recovery may be plausible, and home prices have been rising fairly strongly in recent months, we do not see any unambiguous indication in our expectations data of sharp upward turning point in demand for housing that some observers, and media accounts, have suggested.”
In English, I read that as they remain skeptical that we are about to see a marked improvement in housing. It may not be a clear call, but we are not looking at a clear market.