In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the Case Shiller price index and consumer confidence.

• Case Shiller price data showed that by all three measures, prices rose at the end of the 2nd quarter. The quarterly national index was up 1.2 percent compared to 2011. The monthly 20-city and 10-city indices were up 0.5 and 0.1 percent, respectively, compared to June 2011.
• These annual increases follow 5 consecutive months of annual house price increases as measured by NAR and the FHFA’s prices.
• What’s notable in this release is the extreme movement month-to-month. Even the seasonally adjusted data rose by 0.9 and 1 percent from June to July for the 20- and 10-city indices, respectively. If this pace were to continue, that would mean 11 to 13 percent annual increases in prices among the 20- and 10-city indices.
• Drilling down further, we see that seasonally adjusted prices rose by 3.6 percent in Detroit, 2.3 percent in Atlanta, and 1.6 percent in Phoenix from June to July. If that pace of increase were to be sustained, price growth in these cities would easily exceed 20 percent in a single year.
• Whether or not that pace is sustained (and given the variability in the data it will likely not be), today’s data clearly show that a sharp-turnaround in housing is underway across the U.S., with particular strength in markets that had been hit hard.
• Separately, consumer confidence data took a negative turn in August. While consumer assessment of current conditions was largely unchanged, consumer expectations dropped notably to the lowest level since November 2011. This data can be an indicator of consumer spending, and somewhat offsets the positive home price news.