Home Prices Show Improvement In 19 of the 20 Case-Shiller Markets

<IMG style="BORDER-BOTTOM: #000 1px solid; BORDER-LEFT: #000 1px solid; BORDER-TOP: #000 1px solid; BORDER-RIGHT: #000 1px solid" border="0" alt="Case-Shiller monthly changes March to April 2009" src="http://www.thewrittenblog.com/realestate/images/case-shiller-ap_1246412045.jpg"> Tuesday -- for the first time in a long while -- members of the press met the monthly Case-Shiller Index data with enthusiasm. And why shouldn't they? <A target="_blank" href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_063055.pdf" name="Case-Shiller Index April 2009 report" target="_blank" className="">19 of the 20 measured markets</A> showed a slowing pace of home price decline in April. Here are some of the headlines about the story: <UL> <LI><A target="_blank" href="http://www.businessweek.com/the_thread/hotproperty/archives/2009/06/case-shiller_ho.html" name="Business Week on Case-Shiller" target="_blank" className="">Case-Shiller Home Prices Decline Only 18%</A> (Business Week)</LI> <LI><A target="_blank" href="http://seekingalpha.com/article/146263-case-shiller-less-bad-but-still-considerable-weakness" name="Seeking Alpha on Case-Shiller " target="_blank" className="">Case-Shiller Less Bad</A> (Seeking Alpha)</LI> <LI><A target="_blank" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aufFvZoxcQ6g" name="Bloomberg on Case-Shiller" target="_blank" className="">Home Prices In 20 Cities Drop Less Than Expected</A> (Bloomberg)</LI></UL> Now, the headlines feel negative, but they're actually highlighting some key strengths in April's figures. For example, nearly half of the Case-Shiller markets posted gains in April and all but one showed month-over-month improvement. It's a step in the right direction but doesn't mean that housing has turned around for good. We have to be careful about how we interpret the Case-Shiller Index because it's an imperfect housing gauge. The most obvious Case-Shiller flaw is that it only measures home values in 20 cities nationwide and they're not even the 20 biggest cities. Houston, Philadelphia, San Antonio and San Jose are excluded from the report and each ranks among the <A target="_blank" href="http://en.wikipedia.org/wiki/List_of_United_States_cities_by_population" name="Most populous cities from Wikipedia" target="_blank" className="">country's 10 most populous areas</A>. That said, the report is still important because the Case-Shiller Index identifies broader housing trends and that helps to shape economic policy. Not only versus last month but also versus last year, the pace at which home values are falling appears to be getting slower. This is the third straight month Case-Shiller has reported as such. Now, three months makes a trend, but the data has to stay strong through the summer months to mark a bona fide turnaround. If the Case-Shiller Index shows strength for May and June, it could be the signal for which the markets have been waiting.