Case-Shiller Home Price Indices Continue To Rebound In June

The Case-Shiller home price data for June was released yesterday, showing another increase in the 10-city and 20-city composite indices as they continue to react off of the recent cyclical low following the sharp decline from the bubble peak last decade.

Data through June 2012 showed that all three headline composites ended the second quarter of 2012 with positive annual growth rates for the first time since the summer of 2010. The national composite was up 1.2% in the second quarter of 2012 versus the second quarter of 2011, and was up 6.9% versus the first quarter of 2012.

The 10- and 20-City Composites posted respective annual returns of +0.1% and +0.5% in June 2012. Month-over-month, average home prices in the 10-City Composite were up 2.2% and in the 20-City Composite were up 2.3% versus May. For the second consecutive month, all 20 cities and both Composites recorded positive monthly gains. Eighteen of the 20 MSAs and both Composites posted better annual returns in June as compared to May 2012 – only Charlotte and Dallas saw a deceleration in their annual rates.

“Home prices gained in the second quarter,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In this month’s report all three composites and all 20 cities improved both in June and through the entire second quarter of 2012. All 20 cities and both monthly Composites rose for the second consecutive month. It would have been a third consecutive month had we not seen home prices fall in Detroit back in April.”

The following graph from Calculated Risk displays the long-term view of the 10-city and 20-city composite indices.

The developing rebound was predicted early this year by leading data that suggested the likely formation of a cyclical bottom in 2012. As expected, the latest phase of the secular downtrend following the implosion of the most speculative bubble in residential real estate history declined at a measured rate into the recent low.

In real terms, prices are also exhibiting bottoming behavior as shown on the following graph of the inflation-adjusted versions of the CoreLogic HPI, the Case-Shiller 20-city composite and the Case-Shiller national index.

From a big picture perspective, residential real estate values will remain under pressure as the massive oversupply introduced during the speculative frenzy of the bubble years continues to be slowly integrated into the market. Therefore, although a cyclical bottom is almost certainly in place, a strong rebound in prices is highly unlikely and home values will likely consolidate for many years before the next structural advance develops.