Improving annual rates of return in many cities

June’s data for the S&P/Case-Shiller Home Price Indices were mostly positive. The 10- and 20-City Composites were each up 1.1% for the month, 19 of the 20 cities covered by the indices were up in June over May, and the National Composite was up 3.6% in the second quarter of 2011.

A closer look at the annual rates of change (which removes any seasonal effect on price changes) is finally showing something marginally positive for the housing market. Thirteen of the 20 cities and both monthly Composites saw their annual growth rates improve.

This means that home prices versus the same month last year were better than previously reported; although we must point out this only means they were less negative.  We need to see this trend continue for many months before we know that home prices have truly stabilized.

S&P/Case-Shiller Home Prices Indices. Sources: S&P Indices and FiServ

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  1. justin ruzicka says:

    Maureen, the bulk of Case Shiller Indicies data show Negative Numbers, mainly the “annual decline of 5.9% versus the second quarter of 2010.” Which seem to be an important datat to focus on, instead you choose to talk about vaguely positive news, why not say we are in a tough uphill battle and a lot needs to change in order for a “strong” market to return?

  2. Home Loans Compariso says:

    Thanks for the post by housing views for improving annual rates of return of many cities. Great blog, interesting and informative.

  3. Maureen Maitland says:


    I agree with your observations. All markets and composites posted negative annual rates of return through June 2011, which is a sign of a still weak market. Prior to the August 30th release of June’s data we had been warning people to look at both the monthly and the annual changes in home prices, as you need both to understand the true momentum of the housing market.


    June’s data was the first time we saw some broad improvement in annual rates of return, which is what we wanted to point out. This was one month’s of data, however; so we know we are not out of the woods by a long stretch. Looking at monthly and annual changes together will help to separate seasonality from the true underlying housing market trend.


  4. Lawrence Rose says:

    While your index is certainly useful, it can also be a bit misleading. Since most home purchasers get mortgage backed financing for their purchase, the price of a home is a function of the price paid and the interest paid on the mortgage. When interest rates are falling, the price of the home can remain the same, but in fact it is less expensive to purchase. Factoring interest rate changes can get quite complicated, especially since people who already own homes can refinance when rates go down and thus lower their own housing costs. Perhaps the index should stay the same but when writing about its effects you must keep in mind changes in mortgage interest rates.

    • Maureen Maitland says:

      Hi Lawrence,

      The objectives of the S&P/Case-Shiller Indices are to measure the changes in the value of homes and condos based on their selling prices. Specifically, to measure the difference between a sale and a subsequent sale.

      As your comment suggests, the total cost to the buyer of a home depends on the price, financing costs, moving costs, taxes, etc. These other factors, however, depend on each individual buyer, are not valued the same across buyers and are beyond what the indices measure. The fact that a buyer buys and a seller sells shows that all such costs were taken into account as part of the transaction.

      Many large purchases, including homes and cars, involve costs beyond the price. Again the indices are intended to measure the home prices, not the total costs.


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