The Tuesday September 27 release of the S&P/Case-Shiller Home Price Indices, covering July 2011, may offer a brief respit from worries over the European debt crisis. Recent housing news is mixed with single family housing starts dropping 1.4% in August compared to July and remaining far below levels needed for household formation over the long run. Sales data looks better. Sales of new home in July were up 6.8% from July, 2010 and sales of existing homes in August were up 7.7% from August 2010. The Fed’s recently announced “operation twist” designed to reduce long term interest rates while allowing short term interest rates to creep up is expected to push some mortgages under 4%. However, early press reports suggest that this will most help some current home owners refinances their mortgages and won’t spark much buying. Other press reports confirm that some potential buyers continue to find qualifying for mortgages difficult.
Some key items to look for in Tuesday’s S&P/Case-Shiller report will be any cities making new lows, how many are up month to month or improve year to year. July is still the summer selling season so big tests of home prices may be further in the future.