Case-Shiller Home Price Index Posts a Record Annual Decline


The above chart is through June 2007

We should be hearing from the bottom callers any day now:

“The pullback in the U.S. residential real estate market is showing no signs of slowing down,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “The year-over-year decline reported in the 2nd quarter of 2007 for the National Home Price Index is the lowest point in its reported history, which dates back to January 1987. On a regional level 17 of the 20 metro areas are showing declines in their annual growth rate from what was reported in May.”

During this cycle, Boston was the first metro area to report negative year-over-year returns, back in April 2006. In June 2007, Boston showed an improvement in its annual rate of decline from the value reported in May, –3.9% versus –4.3% reported in May. Boston has shown improvement since the beginning of the year, where its annual growth rate measured –5.5%. More data however, is needed to determine whether Boston, whose growth rate turned negative before other metro areas, is truly the first metro area to turn around.

Note that its a clean sweep: decreases in every city measured, on a year over year basis:


Table courtesy of  TFS Derivatives Corp


Case-Shiller U.S. National Home Price Index Posts a Record Annual Decline in the 2nd Quarter of 2007
S&P, Aug 28, 2007 09:00 AM EST PDF

Existing Home Sales Slowest in 5 Years
Martin Crutsinger
AP Economics Writer, Monday August 27, 5:11 pm ET

Home inventories rise to 16-year high
Rex Nutting
MarketWatch, 12:15 PM ET Aug 27, 2007

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What's been said:

Discussions found on the web:
  1. Owner Earnings commented on Aug 28

    Shouldn’t they start calling it “decline rate” instead of “growth rate.”

  2. Barry Ritholtz commented on Aug 28

    The assumption is that due to population growth, this number should expand over time.

    Now that its contracting, its termed a “negative growth rate.”

  3. Stuart commented on Aug 28

    I recall soooooooo many bottom callers when the Nasdaq was plummeting.
    4,500: ok, we’ve had our 10% correction
    4,000: ok, look at the forward earnings PEs. Tremendous value
    3,500: Chartology 101 says they are extremely oversold
    3,000: Fed model shows they’re still great value
    2,500: Clearly they needed to fall as they were over priced, but they’re done now
    2,000: Earnings are what matter, earnings are what matter. Bottom is in. Forward PEs are at historic lows
    below 1,500: Everybody stay out until we’re clear the bottom is in.

    All the while 7 out of 8 guests were bullish. Why? Easy. They earn a % in fees from asset management. Rule #1. Never say anything that will result in the public selling off some of your assets. Same thing is going on. Same shows with vast majority of guests bullish, same spew, same o same o. Although Forbes and Tamney yesterday on Kudlow were the hardest on my stomach in quite some time.

  4. GerryL commented on Aug 28

    Has Greenspan called a bottom lately?

  5. michael schumacher commented on Aug 28

    Still got plenty of room left to fall……
    this winter is going to be bloody…..

    Went to a “party” at Del Mar horsetrack as a guest of a title company. I’ve never heard or seen so much denial. Although the one I went to two weeks ago was even worse (it was a mortgage company) and it consisted of most of the account “executives” lamenting the downturn and raising of shot glasses full of jagermeister to “the death of the 10 year bond”…….

    These are professionals………….LOL


  6. Greg0658 commented on Aug 28

    Population growth rate.

    I speculate the growth rate is at the bottom of the wealth spectrum. Children are a hedge for them.

    Children for higher income earners are a liability in both cash outlay to rear and the possible legal outlays they are increasingly more responsible for.

    On that subject – the iPhone remodel by the kid. Could an adult get away with that? Do I have to keep an eye on him and his parents (keep them safe from harm) or will you MSM?

  7. Lloyd commented on Aug 28

    PLENTY of vacation/summer homes for sale on Cape Cod, the Hamptons and the Jersey Shore. I’m not surprised prices were up month/month in Boston though…people are buying into towns ahead of the school year. Prices are still headed down.

  8. Stuart commented on Aug 28

    Actually if Apple was smart, they’d hire that kid PDQ before the competition does.

  9. karen commented on Aug 28

    Anyone familiar with the lot prices of The Strand in Dana Point? 8.5 million for less than 11K sf on an oceanfront bluff set the record earlier this year. Apparently, another just sold for $9 million; not sure if it has closed…

    how many people have this kind of cash? or ability to get a loan and carry it along with the property taxes?

    another oceanfront postage stamp property near me has lowered there price by 500K to $6 million.

  10. michael schumacher commented on Aug 28

    oil money most likely…….they never have downturns…..


  11. Mike M commented on Aug 28

    Well, I guess I need to buy David Lereah’s new book, All Real Estate is Local. Perhaps he can give me some pointers on which markets are hot.

  12. jake commented on Aug 28


  13. lauteus commented on Aug 28

    Top Rahmen too… it’s like the college days are back again…

  14. lauteus commented on Aug 28

    oh, wait, is rahmen made in China? damn

  15. Pool Shark commented on Aug 28


    “oil money most likely…….they never have downturns…..”

    While I tend to agree with most of your recent opinions, you need to think before you post.

    The above is an absolutely ignorant statement.

    The reason I am now in a different profession (law) is precisely due to the downturn in the oil industry between ’84 and ’92.

    Perhaps if you actually did your homework you might have discovered there were massive layoffs and consolidation in the oil industry during this period (even here in California).

    Nobody then was complaining about the evil oil companies and their 99-cent per gallon gasoline.

    Here in central California, wells were being capped by the hundreds as production costs came within mere pennies of the oil price.

    Don’t kid yourself MS, EVERY industry has downturns.

  16. PegofLI commented on Aug 28

    when i was in college, rahmen noodles weren t born yet, how depressing.

  17. michael schumacher commented on Aug 28

    Pool Shark-

    Although I should have said that the oil industry meant the billions of dollars that are sucked out of our country “over there”(which is most likely one of the reasons you “no longer work in that industry”) I guess I would also have to imply that some of that money could find it’s way back to the place of origin. So please take the school boy rap of my knuckles and place it squarely where it belongs…on your’s for making MANY assumptions from a one sentence post.


  18. Pool Shark commented on Aug 28

    “Although I should have said that the oil industry meant the billions of dollars that are sucked out of our country “over there”(which is most likely one of the reasons you “no longer work in that industry”)

    What the heck is this supposed to mean? Before you accuse others of making “MANY assumptions” about your posts, perhaps you should learn to write more clearly.

    You also apparently need to learn more about the oil industry.

    btw, grow up

  19. michael schumacher commented on Aug 29

    I’m not the one that made several assumptions… did.

    and you tell me to grow up…

    Nice try.


  20. Financial Investment commented on Sep 7

    Re-Thinking the Joys of Inflation

    This year may be the first since 1991 with a 4 percent inflation rate. After years of running just under

  21. Erik commented on Oct 4

    Ah, what about Houston, Dallas, and San Antonio? What are they, fourth, seventh, and tenth largest cities in this country? How can you give the “BIG PICTURE” and leave three of the top ten off your list? Ah, because their real estate doesn’t fit your statistics.

  22. Barry Ritholtz commented on Oct 5

    Those are the top 10 cities that the Case-Shiller Index tracks:

    “The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan region across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions.”


    The basis of the selection is that as representative of the entire country. Speak to Yale Professor Shiller if you do not approve of his index.

    And get out of the Texas sun — the heat is making you goofy!

  23. rufus commented on Oct 25

    Watch San Diego. The fire damage will ignite a building boom which could possibly change housing’s downturn.

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