Diffusion indices — how many stocks in the S&P 500 rose today or how many cities saw falling home prices last month– are one way some analysts evaluate market conditions. Most attempts to explain why stocks rose or fell cite the number of winners vs. losers. If we do the same thing with the S&P/Case-Shiller Home Price Indices, we get a grim picture: Since August 2006, there are only eight months when fewer than ten of the 20 cities saw falling prices. All those months of reprieve were tied to the first time home buyers tax credit. In almost every month since the bubble burst more than half the cities in the index saw prices drop from the previous month. Based on this analysis, the only apparent improvements were linked to the temporary bounce created by special tax credits and housing is as weak as it was in its worst moments. Forecasters expecting further declines won’t be surprised.
Among the questions from reporters each time the S&P/Case-Shiller Indices are released are calls and emails from which ever city had the largest price decline with the question, “Why us?” While there is a different reason in each month and for each city, there some cities which win the biggest decline prize often and two which never make it to the bottom. The table gives the scorecard for the 133 months through February 2011.