INDICATOR: May Case Shiller Home Price Index/June CoreLogic Foreclosures
KEY DATA: Case Shiller (20-Cities): up 1%; Year-over-Year: up 12.2%/CoreLogic Foreclosures: up 2.5%; Year-over-Year: down 20%
IN A NUTSHELL: "Home prices are rising and with the distressed homes falling sharply, those home price increases are likely to continue for a while."
WHAT IT MEANS: We are completing the picture of the housing market pre-Fed foot-in-mouth disease outbreak and boy was it good. In May, Case Shiller indicated that home prices continued to rise but it looks like the pace may finally be moderating a touch. The month-to-month gain was smaller in May than in April while the year-over-year was the same. Still, that price jump was the highest since March 2006 when the bubble was going strong. Increases were solid across the nation with only Minneapolis posting a small drop from April's levels. Over the year, only two of the twenty cities, New York and Cleveland, were up by less than 6.5%. Four cities had increases in excess of 20%. It looks like the bubble cities are bubbling again. Is that an issue? Not really. Take Las Vegas, which is up 23% for the year. The index is still less than half what it was at the peak. The others remain 25% to 40% below their peaks, so what we are seeing is big changes from low values. But prices should continue to increase. CoreLogic indicated that "so far this year, distressed inventories have fallen dramatically, down 14.4 percent, and serious delinquencies are down 15.9 percent. In the first six months of 2013, the stock of seriously delinquent mortgages has dropped by 412,000." In other words, the enormous excess inventory of generally low-priced distressed homes is beginning to shrink and with prices rising, more homeowners may suddenly find themselves above water. That could lead to some new refinancings and an even slower pace of distressed homes coming on the market.