Home Prices Expected to Take -8% Hit Next Year


Home prices ticked up in July for the fourth straight month, but many cities are bracing for declines in the year ahead. (Sept. 28)

The S&P/Case-Shiller Home Price Indices are the leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions. The indices are calculated monthly and published with a two month lag. New index levels are released at 9am Eastern Standard Time on the last Tuesday of every month.

The indices are calculated from data on repeat sales of single-family homes, an approach developed by economists Karl Case, Robert Shiller and Allan Weiss. Case developed a method for comparing repeat sales of the same homes in an effort to study home pricing trends. He was using data from house sales in Boston in the early 1980s, which was going through a housing price boom. While Case argued that such boom was ultimately unsustainable, he had not considered it a bubble, a commonly-used term to describe similar market trends. Case sat down with Shiller, who was researching behavioral finance and economic bubbles, and together formed a repeat-sales index using home sales prices data from other cities across the country. In 1991, while Weiss was performing graduate studies under Shiller, he persuaded them to form a company, Case Shiller Weiss, to produce the index periodically with the intent of selling the information to the markets. Fiserv, an information management company, bought Case Shiller Weiss in 2002 and, together with Standard & Poor, developed tradable indices based on the data for the markets which are now commonly called the Case–Shiller index.

Options and futures based on Case–Shiller index are traded on the Chicago Mercantile Exchange.

See also …
S&P Case Shiller Index …