San Diego’s Case-Shiller Index numbers were up in April, the fourth month in a row:
From yesterday’s BI:
According to a new note to clients, Deutsche Bank Chief U.S. Economist Joe LaVorgna fully expects tomorrow’s Case-Shiller number to give an inaccurate read on U.S. home prices.
“[W]e believe C-S is understating recent home price appreciation, as a broad array of other home price metrics is showing a more significant improvement in pricing behavior,” wrote LaVorgna.
He cites four competing home price measures that all show home prices increasing year-over-year, which conflicts with the decline in the Case-Shiller number.
For example, the CoreLogic home price series, arguably the broadest measure of home prices in the US, has increased four months in a row at a +11.8% annualized rate. This is the fastest rate since the four months ending November 2005 (+11.7%). Over the past year, the CoreLogic series is up +1.1%. Importantly, the FHFA home price figures have shown similar price appreciation; the series is up three months in a row at a +11.3% annualized pace. Over the last 12 months, FHFA prices have increased +3.0%.
Additionally, the improvement in the year-over-year growth rates is corroborated by both the median existing and new home price data, where the gains are +7.9% and +5.6%, respectively. Hence, we have four different home price metrics that are showing much more substantial home prices improvement than C-S, leading us to downplay the significance of the latter.
LaVorgna also attributes this discrepancy to lagging data. “Over time, we expect C-S to catch up to these other home price series.”
All of this has us wondering if we should really be paying attention to the Case-Shiller at all.