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Housing Prices Did NOT Decline In May as Case Shiller Reported and Are Still Running Hot

I won’t go into the specifics of the worst housing indicator in the world, released today and dutifully spewed by the world’s mainstream financial infomercial outlets. If you want to pick through that type of garbage, go read the Wall Street Journal or Bloomberg or watch CNBC. You can get the irrelevant and misleading data on US housing prices there.

Presented as a public service, here’s a review of a several housing price indicators which are timely and are not smoothed and lagged to the point of silliness as the Case Shiller Index is. They show that as of right now, the US housing price bubble continues to inflate, in spite of weak demand.

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First let’s look at a couple of real time or near real time indicators of the housing trend,’s real time listing prices for late July, and Redfin’s real time contract prices from June. Before you complain that listing prices aren’t sale prices, the fact is that since this data has been published in 2006, the subsequently released lagging data on actual sale prices has shown that the trend of listing prices has been absolutely accurate in showing the direction of US housing prices in real time. Naturally, they are higher than sale prices, but they trend in the same direction and turn at the same points in time. The lagged data reported by various organizations differ in only one material respect. They’re lagged. Listings data is real time. It accurately shows what the market is doing right now, which is starting the usual seasonal second half pullback that begins every year in late summer, while continuing the powerful uptrend track it has been on.

US Home Sale Prices - Click to enlarge

US Home Sale Prices – Click to enlarge

The’s data represents real time listing prices collected from 54 of the largest markets in the US. Redfin collects all contract prices in real time in the 19 large markets it serves. Their sample is skewed by the fact that Redfin serves only large, active, desirable markets, and therefore it overstates price increases relative to the nation as a whole, but again, its direction has proven to be accurate. If the prices of 19 large, active markets are bubbling, that’s certainly sufficient to be a systemic problem even if the rest of the nation is increasing at a slower rate. The markets which Redfin serves are the leaders.

As of July 28, the median asking prices of houses for sale in 54 large US markets was 8.9% higher than a year ago. That’s modestly slower than a peak year to year gain of 11.4% in March, and slightly slower than the May level of +10.8%. The Case Shiller data released today, July 29, showed a similar year to year increase for “May.” It was actually the 3 month average contract price with a time midpoint of March. We had those figures in real time in March. They’re not news now. Do we care where the 3 month moving average of the Dow or the S&P was in March? It’s absurd to view US housing prices in that way. Yet the media continues to report this garbage as if it matters.

Making matters worse is that the month to month decline in prices that Case Shiller is showing for “May” due to its ridiculous methodology is simply not correct. Prices rose from April to May. Redfin showed a 2.9% month to month increase in May contract prices. showed a 2.6% increase in May listing prices. The National Association of Realtors showed a 5.2% increase in sale prices for all houses sold by Realtors in the US which closed in May. CoreLogic, which recently acquired the Case Shiller Index from S&P, even reported that its own housing price measure rose 1.4% in May based on closed sales and that contract prices rose 0.8% that month.

Any way you slice it, US housing prices did not decline in May. We may not know the actual rate of increase for the aggregate US market because different measures measure different slices of the market, but it’s pretty clear that the market remained red hot in May and it was still hot in June. There are indications that markets have cooled slightly in recent weeks, but they’re still plenty hot, even with the year to year decline in contract volume reported by the NAR. Thanks to the Fed’s subsidy of mortgage rates via ZIRP and QE, the US housing price bubble marches on, in spite of the weak demand.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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