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But can the median-based price indicators be believed? As discussed previously, the discrepancy between Case-Shiller HPI (which measures same-home sales) and the median price measurements demonstrates that the latter have been giving some false signals since the subprime debacle began in late 2006.
The Case-Shiller metric has only been updated through March, however, so it’s certainly possible that the April and May price strength showing itself in the size-adjusted median is the real deal. It would not by any means be the first spring rally on record.
But between increasing must-sell inventory, declining demand, tightening lending standards, rising mortgage rates, impending exotic loan resets, and a complete lack of affordability despite the price declines to date, any bout of pricing strength will likely prove temporary. In the meantime, let’s all sit back, relax, and enjoy this month’s round of declarations that the housing downturn is over.
— RICH TOSCANO