The Morning Report
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you need to take on the day.
I said home prices were falling, and showed you how the year-over-year price declines in San Diego have been getting smaller and smaller for the last five months straight.
But the U-T, on the other hand, said that prices had actually gone up slightly between April and May.
So how did we pull our conclusions from the same study?
I’ve been using the Case-Shiller index as a primary price indicator since October 2007.
In November 2008, the economists at the index decided to start releasing another version of the numbers alongside the regular ones. Those, they said, would be put through a seasonal filter to account for normal ups and downs in home sales and prices throughout the year.
At that time, I talked to several economists, including the chief at Case-Shiller, about which numbers would be more accurate for the market. Here’s what I concluded: the only place where the seasonally adjusted numbers seem to have merit is in looking at the month-to-month or quarter-to-quarter price changes, but not the year-over-year stuff.
So if prices always go up between February and March, seasonal adjustment helps me see it’s not necessarily accurate to quote a source or an economist saying we’ve turned the corner if prices go up 0.75 percent.
I decided to continue reporting the original index, but to keep an eye on the seasonally adjusted numbers if I ever wanted to compare a month to the previous month.
And that’s where this month’s index comes in:
The regular, not seasonally adjusted, index showed the first month-to-month rise for home prices since June 2006, with May’s 0.44 percent increase over April. That’s what you might have seen in the U-T.
But the seasonally adjusted version of the index, released to account for normal ups and downs in the year, showed a 0.27 percent decline in the same period.
This wasn’t just an issue in San Diego this time around.
Here’s how the New York Times handled the meshing of the normal index and the seasonal numbers for the national index:
More attention was focused on the news that, when May was compared with April, the price index for 20 major cities showed a half-percent gain. It was the first month-over-month increase in the index in 34 months.
“It is very possible that years from now we will say that April 2009 was the trough in home prices,” said Maureen Maitland, vice president for index services at Standard & Poor’s.
When the numbers were adjusted for seasonal factors, however — the usual way housing figures are presented — the slight gain disappeared and the index was essentially flat. Half of the cities showed continued declines.
If you want to nerd out even more on the difference between seasonally adjusted numbers and the regular index, Calculated Risk has a good post on it this morning.
And in Rich Toscano’s post about the 0.44 percent increase month-over-month, he includes this context:
It’s probably a good time to point out, yet again, that prices tend to rise in the spring and summer even during housing busts. So those who are pointing to the recent price increases as proof that “the bottom is in” will have to do a lot better than that.
If you’re ever scratching your head about why I reported something a particular way, or where these numbers come from, please drop me a line: firstname.lastname@example.org .