S&P Offers Advice on Using Case-Shiller

A proper reading of the Standard & Poor's/Case-Shiller 20-city house price index shows that home prices have declined by 0.7% over the past 12 months ending in January. The S&P index committee is advising users of the Case-Shiller HPI not to rely on the seasonally adjusted numbers. "After reviewing the data, the S&P Case-Shiller HPI committee believes that at the present time the unadjusted series is the more reliable indictor of U.S. housing trends," the committee said. In the last 20-city HPI report, prices fell by 0.4% in January, following a decline of 0.2% in December. Prices were up 0.3% in November. On a seasonally adjusted basis, values rose 0.3% in January and then a similar amount in December, which has been highlighted in many news reports. One independent economist said that large inventories of foreclosures and unsold and vacant houses on the market outweighs any seasonal effects. Few housing and mortgage analysts believe there will be any significant improvement in home prices until next year at the earliest.