Case-Shiller 2007 Home Price Indices Released (Reality Bites)


Every day can’t be a laugh-fest.

The Standard & Poors/Case-Shiller® Home Price Indices through December, 2007 were released yesterday. According to S&P:

(The indices) measure the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions.

By relying on sale pairs, the methodology is intended to be an apples-to-apples comparison. For those with a little free time on their hands this morning, you can indulge yourself in a complete description of the index methodology.

The chart below shows the ten-year trend of the U.S. National Home Price, the 10-City Composite and the 20-City Composite Indices.


The decline in the S&P/Case-Shiller® U.S. National Home Price Index — which covers all nine U.S. census divisions — neared double digits, posting -8.9% versus the 4th quarter of 2006, the largest decline in the series 20-year history. During the 1990-91 housing recession the annual rate bottomed at -2.8%. The 10-City Composite also set a new record, with an annual decline of 9.8%. In December, the 20-City Composite recorded an annual decline of 9.1%

Here is what the breakdown looks like by metro area:


Source: Standard & Poors, data through December 2007

True to form, I will not attempt to embark on an in-depth analysis of  this data. I will, however, make a couple of observations:

  • These indices are for single-family detached homes only. In our San Diego housing market, condominiums are generally fairing worse.
  • As apples-to-apples as the the paired sales methodology is, today’s fruit basket of recordings often involve seller credits and buyer incentives not reflected in the recorded sale price. Therefore, the true price differences may very well be understated.

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