Case-Shiller Shows Strong Metros Except in D.C.

Washington, D.C.—Peter Muoio, Ph.D., senior principal and economist with Auction.com Research, says Case-Shiller Home Price Indices for June may be strong but the headline downplays drastic regional differences:

“The Case-Shiller home prices indices were released this morning and showed continued housing gains, with the 10-city composite increasing 1.1 percent and the 20-city composite up 0.9 percent month to month on a seasonally adjusted basis. Fifteen markets showed seasonally adjusted month-to-month increases, while five declined.  All 20 markets are up year-over year by some 12 percent. The 20-city composite is now up 15.7 percent from the trough, though it is important to note that this still leaves home prices down 23.4 percent from their pre-bust peak. As always, however, the devil is in the details:

•  Three of the five markets that showed monthly declines correspond to markets whose economies we have flagged as flagging. Washington DC, which is feeling the impact of federal cuts and the sequester, has seen employment decline 0.4 percent over the past six months. Home prices dipped 0.2 percent in June according to the Case-Shiller report and a longer-term view shows a much less robust home price recovery in Washington DC, with prices up just 10.7 percent from their trough.

• Both Detroit and Cleveland have seen their economies stall from the earlier manufacturing rebound, and both these markets posted declines in home prices, with Detroit’s 1.4 percent monthly decline the worst among the 20 markets.

• On the flip side, much attention is being paid to the sharp jumps in home prices in Phoenix and Las Vegas. However, these increases are off extremely depressed levels. Las Vegas home prices are still a whopping 50.2 percent below their pre-bust level and Phoenix is still down 40.1 percent. While the Phoenix economy is recovering, with moderate but pretty consistent job growth, the Las Vegas economy has shown far less economic recovery. As a result, the economic base for the Phoenix housing recovery looks somewhat firmer to us than is the case in Las Vegas.

• While San Diego garnered attention for its group-leading 2.2 percent month-over-month seasonally adjusted home price increase, the real star of the show in our mind is Dallas, where home prices increased 0.4 percent month over month; but the 8 percent growth over the past year and 12.1 percent growth from the trough have placed Dallas home prices 1.4 percent above their pre-recession peak. This makes Dallas the only housing market among the Case-Shiller 20 that has surpassed it previous high and underscores our previous commentary about the strong economies and housing markets throughout Texas.”