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The Case-Shiller index of San Diego home prices notched up its second monthly gain in June. Wait — wasn’t June, like, two months ago? And given that the index is based on the preceeding three months’ worth of data, doesn’t this give a better idea of the price movement in May (the middle month of the three) than June?

Yes and yes. Such lagginess is what we hate about the Case-Shiller index. What we love about it is the fact that it is an apples-to-apples comparison based on subsequent sales of the same homes. This provides a much more accurate view of home price changes than indicators like the median price, which measures how much the typical buyer is paying but doesn’t account for what he or she actually got for the money.

As an aside, I’ve now seen two different real estate boosters write in two different publications that the Case-Shiller index is flawed

because it “only counts homes that have been sold twice in a short period of time” (or something to that effect — I’m paraphrasing but the intended meaning is accurate). This is simply and completely untrue — there is no time limit between home sales. So, apparently you can just make stuff up. I wish I’d known that sooner; writing this blog over the past three and a half years would have been a lot less time-consuming.

Back to the June data. The aggregate San Diego index was up 1.6 percent for the month. My pal Kelly notes that even if you back out the seasonal influence of the typical summer rally, the index still rose for the month.

The following graph shows the decline in the three price tiers as well as the aggregate index since their respective peaks. (Please see this article if you’d like to know more about how the tiers are calculated or why a $407,000 San Diego home is considered “high-priced”). After showing some relative weakness, the high tier has been strongest for the last couple months, with the low tier pulling up the rear. Just like old times. Well, 2008, anyway.

For some perspective on the post-boom bloodshed in the low tier, consider that tier’s spectacular rise during the bubble:

The subprime lending frenzy ran up prices at the low end more, percentage-wise, than in the middle or high tiers. The housing crash has seen the low tier give back those artificial gains and return to something approaching parity with the other two tiers.

The next chart provides an updated look at the year-over-year changes to each tier. Prices continue to be firmly down from a year prior, but their annual rate of decline has been steadily shrinking for a while now:

The summer rally lives on in the Case-Shiller index. And based on more recent data on prices and inventory, I expect the Case-Shiller rally will continue for at least another couple of months.

— RICH TOSCANO

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