The S&P Case-Shiller home price indices were released this morning. On a non–seasonally adjusted basis, home prices rose for a second consecutive month in May, but are still down 4.5% over the last 12 months. After adjusting for seasonality, home prices are down slightly in May. The Case-Shiller 20-city composite has now fallen in 11 of the last 12 months.
To get a better look at the breadth of home prices we’ve set up one-month and six-month diffusion indices of the Case-Shiller 20-city composite. Our diffusion indices measure the percentage of cities in the index showing a gain in home prices. The one-month index measures the percentage of components showing a month-to-month gain while the six-month index measures the percentage of components showing a gain over the last six months.
Looking first at the six-month diffusion index, we see that only 10% or two of the cities in the Case-Shiller 20-city composite are up over the last six months. The two gainers are Atlanta and, not surprisingly, Washington, D.C. The biggest losers over the last six months are Detroit (-5.5%), Tampa (-4.7%), and Minneapolis (-4.7%). Moving to the one-month diffusion index, which is more sensitive to changes in trend, we see some initial signs of improvement. Home prices in almost half of the cities in the Case-Shiller 20-city composite increased in May. The biggest gain was in Boston, up 1.2%, and the biggest decline was in Detroit, down 3.4%.
While home prices are still depressed, the improving trend in our one-month diffusion index signals that they may finally be nearing a bottom—at least in certain regions of the country.
Jeremy Jones, CFA
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