Case-Shiller Home Price Index - Home Prices are Stabilizing by dk24934

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									Northern Trust             Case-Shiller Home Price Index – Home Prices are Stabilizing
Global Economic Research
50 South LaSalle           July 28, 2009
Chicago, Illinois 60603
northerntrust.com          The Case-Shiller Price Index for May 2009 shows a significant improvement in the pricing
                           situation of homes. On a month-to-month basis, the 20-metro Case-Shiller Home Price Index
                           dropped only 0.16% in May, while the 10-metro index edged down 0.2%.
Asha G. Bangalore
agb3@ntrs.com                                                                                 Chart 1
                                                                   S&P/Case-Shiller Home Price Index: Composite 20
                                                                           % Change - Period to Period        SA, Jan-00=100

                                                                   S&P/Case-Shiller Home Price Index: Composite 10
                                                                          % Change - Period to Period         SA, Jan-00=100
                                                  2                                                                                              2


                                                  1                                                                                              1



                                                  0                                                                                              0


                                                 -1                                                                                              -1



                                                 -2                                                                                              -2


                                                 -3                                                                                              -3
                                                            99     00      01     02     03     04       05      06     07         08   09
                                                          Sources: S&P, Fiserv, and MacroMarkets LLC /Haver Analytics

                           On a year-to-year basis, the Case-Shiller Price Index was down 17.1%, with the largest drop for
                           the current cycle occurring in January 2009 (-19.01%). Among the 20-metro areas, only three
                           recorded year-to-year declines in May that were larger than the prior month (see chart 3). The
                           major conclusion is that home prices are stabilizing.
                                                                                              Chart 2
                                                                    S&P/Case-Shiller Home Price Index: Composite 20
                                                                           % Change - Year to Year       NSA, Jan-00=100     (I)

                                                  20                                                                                         20



                                                  10                                                                                         10



                                                      0                                                                                      0



                                                 -10                                                                                         -10



                                                 -20                                                                                         -20
                                                              00     01      02    03     04     05      06      07     08         09   10
                                                           Source: S&P, Fiserv, and MacroMarkets LLC /Haver Analytics
                           The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust
                           Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein,
                           such information is subject to change and is not intended to influence your investment decisions.
                                                         Chart 3
                                 Number of Metro Areas Showing an Accelerated Decline in
                                 Home Prices (yoy change) in Current Month vs. Prior Month


                       20
                       18         17
                                             16
                       16
                       14
                       12                              11
                                                                 10
                       10
                        8                                                    7
                        6
                        4                                                               3
                        2
                        0
                             Dec-08         Jan-09   Feb-09    Mar-09     Apr-09      May-09




Consumer Confidence Index Slips in July
The Conference Board’s Consumer Confidence Index declined to 46.6 in July from 49.3 in the
prior month. The Consumer Confidence Index has dropped for two consecutive months after
three straight monthly increases. The Present Situation Index (23.4 vs. 25.0 in June) and the
Expectations Index (62.0 vs. 65.5 in June) fell in July.

                                                         Chart 4
                                                  Consumer Confidence
                                                     SA, 1985=100 (I)

                150                                                                               150


                125                                                                               125



                100                                                                               100


                 75                                                                               75



                 50                                                                               50


                 25                                                                               25
                            70         75      80      85      90       95       00         05
                       Source: The Conference Board /Haver Analytics
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust
Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein,
such information is subject to change and is not intended to influence your investment decisions.

                                                                                                                         2
The index tracking if jobs are hard to find rose to 48.1 in July from 44.8 in the prior month, while
the index measuring if jobs are plentiful declined to 3.6 from 4.5 in June. The net measure of
these two indexes is positively related to the unemployment rate (see chart 5). The responses
recorded for July suggest that the unemployment rate will be higher in July vs. June.


                                                       Chart 5
                                     Civilian Unemployment Rate: 16 yr +
                                                      SA, % (I)

                               Jobs-Hard-to-Get less Jobs-Plentiful Index
                                                           (I)
          12                                                                                              60
                   r = 0.87

                                                                                                          40
          10

                                                                                                          20
            8

                                                                                                          0
            6
                                                                                                          -20

            4
                                                                                                          -40


            2                                                                                             -60
                  50     55     60     65    70     75     80     85     90     95     00     05     10
                Source: Haver Analytics




The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust
Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein,
such information is subject to change and is not intended to influence your investment decisions.

                                                                                                                         3

								
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