What to expect in tomorrow’s S&P/Case-Shiller August ‘09 Numbers

Tomorrow is the last Tuesday of the month, which for those of us watching the US housing market, means that the August 2009 values S&P/Case-Shiller Home Price Index get released. While the S&P/Case-Shiller Home Price Index showed a steady rise from May to July 2009 and a 1.6% rise from June to July, our data is showing that rise will be stemmed a bit from July to August.  Ask prices fell from August to September and the price of new listings dropped considerably as well.  These point to a more negative report coming out tomorrow in our estimation.

Here’s what we’re seeing in our data:

• From our October 2009 Real-time Housing Report, The Altos Research 10-City Composite Index was down by 0.5% in September and 1.1% during the third quarter.
• Using the housing market ask prices and more specifically, looking at the ask prices of new sellers entering the market each week, it’s clear that new sellers are viewing the market more pessimistically than sellers entering the market during the Spring.  This would make sense because of the clear seasonality in the national housing market.

• Existing sellers are starting to show more pessimism as well, as the number of active listings with price reductions is starting to show signs of increasing this Fall.  This value stabilized in July and is stabilizing again this Fall.  The initial stabilization in July 2009 is evidence that sellers initiated price reductions to motivate buyers, influencing aggregate prices to move lower:

Just so you know, we’re now the only ones a little bearish on the housing market this Fall. Negative sentiments are aplenty out there.  Here’s a sampling of what a few others are seeing in the housing market:

• Whitney Tilson of T2Partners sees the recent gains in the housing market as “the mother of all head fakes” in his interview on The Business Insider.
• Last month, Ratings Direct® (Standards & Poor’s) stated that “home prices are likely to lose steam.”
• More recently (October 19), Ratings Direct’s look on the homebuilder segment states that “the recent positive trends in home prices will reverse modestly in the near term, as job losses and weak consumer sentiment weigh on demand and as high levels of foreclosures increase supply.”
• James Hagerty at the Wall Street Journal reports additional mortgage pressure in key markets will cause foreclosure activity to rise in the short-term.
  
• At the The Real Deal Distressed Opportunities Forum earlier this month, Mark Zandi and Nouriel Roubini both said that a 7-10% price decline in the national housing market could be expected.
• The MacroShares Housing Market “down” ETFs (DMM) have been steadily rising in recent weeks.

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(Disclosure: Author owns a modest number of DMM shares mentioned in this article. This does not suggest or imply investment advice of any kind.  As our CEO likes to say – “make your own trades cowboy…”)

Tagged as: Case Shiller, Housing Market Forecasting, US Housing Market, US Housing Price Trends