Case-Shiller Housing Index: May'09 Data and Forecast

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The Case-Shiller Housing Index came out this morning with the May '09 data. Here are some highlights and below you will see my updated chart along with an updated 18-month forecast based on my ARIMA model.

• The non-seasonally adjusted 10-city composite was up slightly compared to last month's data (April data) at a gain of 0.4%. This is the first time since June 2006 that the index was up month over month.
• The seasonally adjusted data was still down 0.2%.
• The year over year change for the 10-city composite is 16.8% down.
• The following cities showed positive gains for May over April: San Diego, San Fransisco, Denver, Washington D.C., Atlanta, Chicago, Boston, Detroit, Minneapolis, Charlotte, New York, Cleveland, Portland, and Dallas.
• Only 6 of the 20 cities tracked did not show gains.

Here is my updated 10-city composite chart with 18 month forecast:

As I was suspecting in past forecasts, the outlook for the next few months is now looking like we will see a few positive months as the seasonal effect kick in. Overall the long term outlook based on the the ARIMA model has been improving over the last few months. The low point predicted for next April/May has been coming up with each successive new forecast. This all seems to bode well for the housing market. I don't think we have seen the bottom but it is certainly looking like the bottom is more and more likely to come next year. This latest forecast has the bottom at 6% lower than the current 10-city composite Case-Shiller index. As the confidence intervals indicate, the ultimate direction from there could go up or down considerably. The confidence intervals should be viewed as the most optimistic and pessimistic outcomes going forward.

As I have have mentioned in past posts, the seasonal effect on housing prices can obscure what the real general trend is doing so later this year when the negative seasonal effect kicks back in, that will really set the stage for where the low gets next year. For now we can enjoy some months of positive housing price movements for a change!

I will have some follow-up posts in the next few days looking more at the regional/city trends and looking at the evolution of the ARIMA forecast that has occurred over the past few months.

For more of my past posts on the Case-Shiller including alot more background on my analysis methodology see here.

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