Home prices up again

Standard & Poors’ Case-Shiller Index of home prices was up for the third consecutive month in June.  Specifically they were up 3.6%.

Analysis: Many news headlines are reporting the data in the worst light possible by pointing out that this is the first time in 16 months that the rise was less than the month prior’s data.  Big deal!  That home prices are rising faster than the economy is growing (2nd quarter GDP up 1.6%) is a big deal.  Homes are the largest purchase made in a lifetime for most people.  That folks are willing to pay more for that purchase for 16 consecutive months is a sign that people are starting to feel that the economy is stabilizing.

I am not reading too much into this data, however, because the data are two months old.  The economy two months ago looked stronger to most consumers than it does now.  I would not be surprised if next months reading of the Case-Shiller Index shows a greater slow down.  What the data do show is that when there is an absence of bad stock market performance, or other external shocks to the economy, that consumers are feeling more stable.  When the U.S. consumer exists scramble mode the rest of the world, myself included, will breathe a sigh of relief.

Importance grade: 5; if this data were more timely the grade would be about an 8 or a 9.

Jason


1 Comment

  1. Jason,

    Another point I think is important involving home prices is Americans' apparent new propensity to buy smaller homes than in the previous 5-10 years. That may explain the drop in median home sale prices, as the smaller ones went first. Now supply/demand is bringing prices back up, and/or the larger homes are beginning to sell again. I can only hope people eventually start buying smaller, higher quality homes to live in.

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