Today’s Case Shiller results for April indicate that, as we suspected, the spring residential selling season didn’t vanish completely (albeit the worst economic news came in May and June, so we’ll have to wait and see).
On a non-seasonally unadjusted basis, the S&P Case Shiller 20-City index was up 0.7%.
Normally, we only pay attention to the NSA data but it is important to note that the index was down 0.1% on a seasonally adjusted basis – which anticipates that prices typically rise during the spring selling season.
The test will be whether price stability continues through May and June, and then what happens over the balance of the year. Last year, of course, we saw a similar blip in the spring but the party ended over the summer as the market turned down once more for the next eight months.
We expect that the pattern will be similar this year, possibly worse as we know that sales volumes were weak in general and May/June saw consumer confidence fall on economic news. Countering this is the fact that foreclosure liquidations have fallen to a trickle over the past several months and that might temporarily support prices. Of course, all that does is to kick the can down the road in the hope that when the liquidations actually occur, we will see an improved employment and economic picture. Not holding our breath.
We continue to expect the 20-City index to stabilise in the 125 to 130 range, and we still hope we can get there by year end 2011 or Q1 2012, to have a clean slate for a more normalized selling season a year from now.
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