How the Case-Shiller Home Price Index Works

The S&P/Case-Shiller Home Price Index is one of those terms you hear a lot because it’s used to measure the health of the U.S. housing market—which hasn’t actually been healthy since the bursting of an enormous national and global real estate bubble in 2008.

While various government measurements also measure the housing market, the Case-Shiller Index is widely considered the most authoritative. CNBC explains.

What is the S&P/Case-Shiller Home Price Index?

The Case-Shiller Index (as it is commonly known), tracks changes in the value of residential real estate, both nationally and in 20 metropolitan regions.

It is composed of these separate indexes:

  • The national home price index, covering nine major census divisions.
  • The 10-city composite index
  • The 20-city composite index
  • 20 individual metro area indexes for each of the cities in the indexes above

Which cities that make up the indexes?

The Composite 10 Index cover Boston, Chicago, Denver, Las Vegas, Los Angeles, South Florida, New York, San Diego, San Francisco and Washington.

The Composite 20 Index includes those cities, plus Phoenix, Tampa, Fla., Atlanta, Detroit, Minneapolis-St. Paul, Charlotte, N.C., Cleveland, Portland, Ore., Dallas/Fort Worth and Seattle.

Who are Case and Shiller?

Karl E. Case is an emeritus economics professor at Wellesley College. Robert J. Shiller is an economics professor at Yale University.

How did the index get started?

In the 1980s, Case developed a method for comparing repeat sales of the same homes in an effort to study home pricing trends, using data from house sales in Boston—which at the time was in the midst of a housing boom.

Case argued that the boom was unsustainable, but he didn’t consider it a bubble, a commonly used term to describe similar market trends. (The Dutch Tulip Bubble of the early 1600s is the most popular example of a bubble.)

Eventually, Case collaborated with Shiller, who was researching behavioral finance and economic bubbles. In the late 1980s they created a repeat-sales index using home sales price data from cities across the country.

Then in 1991, Allan Weiss, studying for a graduate degree under Shiller, persuaded Case and Shiller to form a company, Case Shiller Weiss, to produce the index with the intent of selling the information to the markets.

Fiserv, an information management company, bought Case Shiller Weiss in 2002 and, together with Standard & Poor’s, developed tradeable indexes based on the data for the markets—now called the Case–Shiller Index. (Weiss went on to found Market Shield Capital in 2006.)

When is it published?

The indexes are published on the last Tuesday of each month, with a two-month lag.

Many of these price indexes—including 20 cities, low- medium- and high- tier home price indexes, condominium indexes and a U.S. national index—are managed by Standard & Poor’, and are available to the public on Standard & Poor’s web site. Options and futures based on the Case–Shiller index are traded on the Chicago Mercantile Exchange.

How do they come up with the indexes?

They use what is called the “repeat sales method,” analyzing data on single-family properties with two or more recorded sales transactions. The data are accumulated in rolling three-month periods to offset any delays in sales data recording and to keep sample sizes large enough.

For each sales transaction, a search is conducted to gather information on any previous sale of the same property. If an earlier transaction is found, the two are paired and considered a “repeat sales transaction.”

Each sales pair is examined to eliminate factors that might distort the calculations, including:

  • Transfers between family members
  • Substantial physical changes to the property
  • Transactions in which the property type designation has changed
  • Suspect data

Sales pairs with approved data are combined with all other sales pairs found in a particular Metropolitan Statistical Area (MSA) to create the regional MSA-level index. The Metro Area Indexes are then combined to create the national composite.


Weekly national mortgage survey results

Results of Bankrate.com’s April 17, 2013, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

  30-year fixed 15-year fixed 5-year ARM
This week’s rate: 3.61% 2.85% 2.66%
Change from last week: -0.03 -0.04 -0.04
Monthly payment: $751.09 $1,127.59 $665.76
Change from last week: -$2.79 -$3.16 -$3.48

SHORT VIDEO: From Gloom to Bloom • Housing Outlook

Each month, Freddie Mac compiles data on major economic, housing and mortgage market indicators and offers forecasts. Vice President and Chief Economist, Frank Nothaft provides a brief video preview of this month’s outlook.

U.S. Economic & Housing Outlook

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Economists Revise Housing Figures Amid Optimism

Several economists have recently revised their predictions on housing values to reflect a stronger-than-expected real estate rebound, and some have even doubled their original forecasts over the rise in home prices. For example, economists at Bank of America revised their home price forecast from 4.7 percent this year to 8 percent.

Capital Economics’ Economist Paul Diggle upwardly revised his home price forecast too, from a 5 percent projection to an 8 percent rise in home prices this year. 130314BofAForecast

“Prices of both new and existing homes are picking up, the latter by over 10 percent year-on- year,” Diggle notes. “Indeed, after a couple of years during which new house prices outperformed, primarily owing to builders constructing more homes for the higher-end market, we now expect existing house prices to close the gap. As more consumers are able to access mortgage credit, home builders should widen their offering, while continued investment demand will bid up existing house prices.”

Consumers are growing more optimistic about home prices too. A recent report of consumers from mortgage giant Fannie Mae showed that 48 percent believe home prices will rise over the next year.

Ivy Zelman, an independent real estate analyst, told CNBC last week that “we’re in a nirvana for housing. I’m the most bullish I’ve ever been.” Zelman said that home prices could rise for another four to six years.

Big Discounts on Foreclosures Fading

Home buyers may not get as great of a deal on a foreclosure as they once did, according to Paul Diggle from Capital Economics in a new report.

Foreclosure starts are falling and the inventory of foreclosures has been decreasing, which has caused the discount on foreclosures to lessen.

The discount on foreclosed homes compared to other homes has fallen to a 12 percent average, according to Diggle. That was about the same percentage prior to the housing crash, he says. Last year the foreclosure discount averaged about 30 percent.


“Ultra-low mortgage interest rates and steady, if not spectacular, job creation could mean that the delinquency rate and foreclosure start rate are falling quickly,” Diggle writes.

VIDEO: November Existing-Home Sales &Prices Maintain Upward Trend

WASHINGTON (December 20, 2012) – Existing-home sales continued to improve in November with low inventory supply pressuring home prices, according to the National Association of Realtors®.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October, and are 14.5 percent higher than the 4.40 million-unit pace in November 2011. Sales are at the highest level since November 2009 when the annual pace spiked at 5.44 million.

Lawrence Yun , NAR chief economist, said there is healthy market demand. “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation,” he said. “With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes. Areas impacted by Hurricane Sandy show storm-related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas.”

Home Sales For Homes $750,000+ Are Up 50%

The national median existing-home price2 for all housing types was $180,600 in November, up 10.1 percent from November 2011. This is the ninth consecutive monthly year-over-year price gain, which last occurred from September 2005 to May 2006.

Distressed homes3 – foreclosures and short sales sold at deep discounts – accounted for 22 percent of November sales (12 percent were foreclosures and 10 percent were short sales), down from 24 percent in October and 29 percent in November 2011. Foreclosures sold for an average discount of 20 percent below market value in November, while short sales were discounted 16 percent.

“The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages,” Yun said.

Total housing inventory at the end of November fell 3.8 percent to 2.03 million existing homes available for sale, which represents a 4.8-month supply 4 at the current sales pace; it was 5.3 months in October, and is the lowest housing supply since September of 2005 when it was 4.6 months.

Listed inventory is 22.5 percent below a year ago when there was a 7.1-month supply. Raw unsold inventory is now at the lowest level since December 2001 when there were 1.89 million homes on the market.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.35 percent in November from 3.38 percent in October; the rate was 3.99 percent in November 2011.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said there’s been speculation of a rise in short sales before the end of the year with pending expiration of the Mortgage Forgiveness Debt Relief Act. “However, there’s been no movement in short sales, their market share is staying in a narrow range, and they’re still taking much longer to sell – typically three months,” he said.

“The fact remains it is extremely difficult to expedite a short sale, and banks’ response to client urgency is only starting to improve. However, we’re hopeful that the act will be extended before it expires on December 31 so sellers don’t have to pay taxes on forgiven mortgage debt, which would be unfairly treated as income for owners who are selling under duress,” Thomas said.

The median time on market for all homes was 70 days in November, slightly below 71 days in October, but is 28.6 percent below 98 days in November 2011. Thirty-two percent of homes sold in November were on the market for less than a month, while 20 percent were on the market for six months or longer; these findings are unchanged from October.

First-time buyers accounted for 30 percent of purchases in November, down from 31 percent in October and 35 percent in November 2011.

All-cash sales were at 30 percent of transactions in November, up slightly from 29 percent in October and 28 percent in November 2011. Investors, who account for most cash sales, purchased 19 percent of homes in November, little changed from 20 percent in October; they were 19 percent in November 2011.

Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.44 million in November from 4.21 million in October, and are 12.4 percent higher than the 3.95 million-unit level in November 2011. The median existing single-family home price was $180,600 in November, up 10.1 percent from a year ago.

Existing condominium and co-op sales jumped 9.1 percent to an annualized level of 600,000 in November from 550,000 in October, and are 33.3 percent above the 450,000-unit pace a year ago. The median existing condo price was $181,000 in November, which is 10.6 percent higher than November 2011.

Regionally, existing-home sales in the Northeast rose 6.9 percent to an annual rate of 620,000 in November and are 14.8 percent above November 2011. The median price in the Northeast was $232,900, down 2.0 percent from a year ago.

Existing-home sales in the Midwest increased 7.2 percent in November to a pace of 1.19 million and are 21.4 percent higher than a year ago. The median price in the Midwest was $141,600, which is 7.0 percent above November 2011.

In the South, existing-home sales rose 7.9 percent to an annual level of 2.04 million in November and are 17.2 percent above November 2011. The median price in the South was $157,400, up 10.5 percent from a year ago.

Existing-home sales in the West rose 0.8 percent a pace of 1.19 million in November and are 4.4 percent higher than a year ago. With ongoing inventory constraints, the median price in the West was $248,300, which is 23.9 percent above November 2011.

SOURCE: National Association of Realtors


2013 Brings Optimism For The Real Estate Industry

13 Reasons to Look Forward to 2013

When we look back on 2012 a long time from now, it may be viewed as the first year of the recovery, the year in which real estate reversed its course and moved in a more positive direction.

With that in mind, here are 13 reasons to be optimistic — courtesy of REALTOR® Magazine:


1. There’s greater optimism about increasing home values.

2. More new households are forming.

3. Home shoppers are feeling a greater sense of urgency.

4. Home ownership remains a goal of members of the Millennial generation.

5. Foreclosure starts are falling to pre-housing-bust levels.

6. Interest rates should remain low through next year’s selling season.

7. Loan demand for home purchases is climbing.

8. More Americans say it’s a good time to sell.

9. The number of improving housing markets is going up.

10. Job creation is expected to provide a much-needed boost to the commercial sector.

11. Housing starts are picking up as builder confidence increases.

12. As housing values rise and equity returns, fewer home owners are underwater.

13. Real estate is contributing to an overall economic recovery.

That’s not to say there aren’t challenges. Lending remains tight, there’s a large foreclosure backlog, and regulatory challenges and the fiscal cliff loom ahead. But on balance, real estate appears to have a bright future in 2013.

SOURCE: National Association of Realtors®

Are Young Adults Missing Out on Big Housing Opportunities?

With low mortgage rates and fallen home values, some housing analysts are questioning why more first-time buyers—particularly the younger generation—aren’t flooding to the market. As a recent Reuters article questions: Could they be missing out on the “sweet spot” of the housing market by delaying their home purchases?

The desire to buy is certainly there. Ninety-three percent of renters in the millennial generation say they plan to buy a home in the future, according to a poll by Trulia. But the number of first-time home buyers remains constrained: One in three home buyers are first-timers, the article notes.

“Maybe that’s because some millennials—generally those now in their 20s to early 30s—don’t have the jobs that qualify them for mortgages, or because they are taking time to accumulate down payments, or because the ongoing wave of foreclosures has frightened them,” writes Linda Stern, a Reuters columnist.

Whatever the case, they may still have some time to cash in, particularly as long as financing a home purchase remains so low. The Fed announced it is keeping interest rates low until the unemployment rate drops below 6.5 percent, which the Fed doesn’t expect to happen until 2015.

Real estate professionals may be able to help the younger generation work toward their goal of home ownership in the meantime too.

For example, as the Reuters article points out, those looking to buy soon should take several steps to home ownership, such as working to improve and protect their credit score. “If your score is anything less than 740, find out how you can raise it — paying down a credit card balance, putting more time between you and your last late fee,” Stern writes. The article also notes CreditKarma.com, a free site that allows you to monitor your credit score until it’s more attractive to a lender.

Young adults who are aspiring for home ownership also should start tightening up their wallets and saving for a down payment and closing costs. Also, they should learn about mortgages available from the Federal Housing Administration, which offers loan products with low down payments that are popular among first-time home buyers.

SOURCE: Realtor Magazine

INTERACTIVE SALES MAP: Metropolitan Sales Areas Q2 2012

What’s Your Market’s Median Home Price?

Click on your metropolitan statistical area to get the latest quarterly median home price for your market, and its percentage change from the previous year.

View Metropolitan Sales Area Q2 2012 in a larger map

This housing data is provided by the Research division of the National Association of REALTORS®.

July Home Prices See Biggest Monthly Jump Since 2006 – Idaho # 2

Home prices in the U.S. enjoyed the largest annual increase in July that they had in six years, increasing 3.8 percent from prices in July 2011.  CoreLogic, in releasing its July Home Price Index (HPI) which also includes sales of distressed properties, noted that July’s prices were also up from the previous month, increasing 1.3 percent.  This was the fifth consecutive month that the Index had increased on both an annual and month-over-month basis.

When distressed sales, transactions involving homes that have been foreclosed into bank ownership (REO) or are in some stage of foreclosure, are excluded from the figures CoreLogic’s HPI rose 4.3 percent from July 2011 and was up 1.7 percent month-over-month.  This was also the fifth consecutive month-over-month increase.

Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to July 2012) was -27.2 percent.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -20.2 percent.

The five states with the highest annual appreciation rate including distressed sales were Arizona (+16.6 percent), Idaho (+10.0 percent), Utah (+9.3 percent), South Dakota (+8.3 percent), and Colorado (+7.3 percent.)  With distressed sales excluded the best performance was still in Arizona (11.3 percent) followed by Utah (+10.5 percent), Montana (+9.1 percent), South Dakota (+8.6 percent), and North Dakota (+6.9 percent.)

Overall depreciation was highest in Alabama (-4.6 percent), Delaware (-4.8 percent), Rhode Island (-2.2 percent), and Connecticut and Illinois, each at -1.7 percent, With distressed sales excluded prices fell 3.5 percent in Delaware, 2.4 percent in Alabama, 1.2 percent in New Jersey and were down fractionally in Virginia and Connecticut.

Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 23 are showing year-over-year declines in July, four fewer than in June.

CoreLogic predicts that prices will show an even faster rate of appreciation in its August report with an expected annual increase of 4.6 percent including distressed sales and 6.0 percent for market rate sales.  The July to August changes for the distressed and the non-distressed indices are expected to be +0.6 percent and +1.3 percent respectively.  The Pending HPI is based on Multiple Listing Service data that measures price changes in the most recent month.

“It’s been six years since the housing market last experienced the gains that we saw in July, with indications the summer will finish up on a strong note,” said Anand Nallathambi, president and CEO of CoreLogic.  “Although we expect some slowing in price gains over the balance of 2012, we are clearly seeing the light at the end of a very long tunnel.”

 “The housing market continues its positive trajectory with significant price gains in July and our expectation of a further increase in August,” said Mark Fleming, chief economist for CoreLogic. “While the pace of growth is moderating as we transition to the off-season for home buying, we expect a positive gain in price levels for the full year.”


Lead Generation

Market Statistics

  • 11.77,13.65,14.63,15.16,14.55,13.11,11.37,11.11,10.75,10.02,9.92,9.83

Information is deemed to be reliable, but is not guaranteed. © 2018