For August, the Case-Shiller Index showed annual home values improving across 19 of 20 U.S. markets. It’s the first time in 3-plus years that the benchmark housing index has shown such strength. According to a Case-Shiller Index spokesperson, “The rate of annual decline in home price values continues to improve.” It’s yet another sign that housing may have already bottomed.
However, just because the Case-Shiller Index shows a stabilization in home values, that doesn’t necessarily make it true. This is because real estate happens on the local level and the Case-Shiller Index is more “national”. It tracks data in just 20 U.S. cities. Homeowners everywhere else are unaccounted for. Furthermore, even within the 20 tracked Case-Shiller markets, there’s no allowance for the natural sub-markets that exist. Some neighborhoods under-perform and some neighborhoods out-perform. Case-Shiller treats them all the same.
Despite its imperfections, though, the Case-Shiller Index remains a helpful, broader measurement of U.S. real estate. Economists believe that housing led the U.S. into the recession and they believe housing will lead us out, too. If that’s true, August’s Case-Shiller data is another step in the right direction.
