S&P Case Shiller Index posts strong gains

The S&P Case Shiller Index posted strong gains. Month over month, the Composite-10 index increased by 1.9%. The index is still down 15.13% year over year. 17 of the 20 markets in the Composite-20 index posted positive month over month gains. The data for the index is a compiled using a three month average. Since last month was positive and the trend is moving up strongly, next month should also come in with a strong gain.
The month over month gains are the highest since the market peaked in 2005.

I have removed the CME Housing Futures data from the chart because they have become so thinly traded.

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Case-Shiller index shows the decline in housing prices is slowing

The S&P Case-Shiller home price index for April 2009 was released today by Standard and Poors. The composite-10 declined 0.67% in April compared to March 2009 (last month it declined by 2.10%) and declined by 18.01% from a year ago (compared to 18.68% last month).

The composite-10 is now down 33.56% from its peak. The Composite-10 has now declined at a slower pace year over year for three months in a row after declining at a faster pace each month for 25 months in a row. The home price index is not seasonally adjusted. In the last 20 years, home prices have averaged appreciation of 5.29% a year. March through August are typically the strongest months for appreciation and home prices have on average appreciated by 4.40% during that 6 month period. September through February are the weakest months; home prices have on average appreciated by only 0.89% during that 6 month period. In the next month or two, the index could post a positive month over month gain. However, I expect it to fall again as we head into the winter months.

The CME futures market is pricing in a further drop of -10.20% by next March for the composite-10.

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Existing Home Sales and Median Prices Rise Slightly

The National Association of Realtors released the existing home sales figures for May 2009 today.  Sales increased to a seasonally adjusted annual rate of 4.770 million units in March up from 4.660 million units in April and down from 4.950 million units in May 2008.

The median sales price was $176,000 for May up from $166,600 in April (up 3.8%) but down from $207,900 in May 2008 (down 16.8%). Months supply was 9.6 in May, down from 10.1 in April. According to the NAR, distressed properties accounted for 33% of all transactions in May down from 45% in April. 

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Case-Shiller Home Price Index Falls at Slower Pace

The S&P Case-Shiller home price index for March 2009 was released today by Standard and Poors. The composite-10 declined 2.06% in March compared to February 2009 (last month it declined by 2.12%) and declined by 18.65% from a year ago (compared to 18.89% last month).

The composite-10 is now down 33.09% from its peak. The Composite-10 has now declined at a slower pace year over year for two months in a row after declining at a faster pace each month for 25 months in a row.

The CME futures market is pricing in a further drop of -10.40% by next March for the composite-10.

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Case-Shiller Home Price Index decline slows

The S&P Case-Shiller home price index for February 2009 was released today by Standard and Poors. The composite-10 declined 2.11% from January 2008 (last month it declined by 2.55%) and declined by 18.83% from a year ago (compared to 19.39% last month). The composite-10 is now down 31.64% from its peak.

The Composite-10 has now declined at a slower pace year over year for the first time in over two years.  The CME futures market is pricing in a further drop of -12.30% by next February for the composite-10.

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Existing home sales decrease but median sales price is up

The National Association of Realtors released the existing home sales figures for March 2009 yesterday. Sales decreased to a seasonally adjusted annual rate of 4.570 million units in March down from 4.710 million units in February and down from 4.920 million units in March 2008.

The median sales price was $175,200 for March up from $168,200 in February (up 4.16%) but down from $200,100 in March 2008 (down 12.4%).  Months supply was 9.8 in March, up from 9.7 in February.  According to the NAR, distressed properties accounted for just over half of all transactions in March and are selling for 20 percent less than traditional homes.

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Earnings Season

Earnings season is upon us once again.  According to Marketwatch:  "Analysts surveyed by FactSet Research on average expect earnings at S&P 500 companies to be down 35.9% from the year-earlier quarter. Those surveyed by Thomson Financial expect earnings to be down 36.6% from the year earlier." 

In the fourth quarter of 2008, earnings were negative as a whole for the first time for the S&P 500.  On a bottom up basis, analysts are projecting that continuing earnings for Q1 2009 will come in at $13.00 a share up from -$0.11 in Q4 2008.  They are projecting as reported earnings to rebound to $8.75 up sharply from the stunning loss of -$23.16 for Q4.

Analysts missed the impact the recession would have on stocks.  Just 6 months ago, they forecast that Q4 continuing earnings for 2008 would be close to the all time record reached in Q3 lf 2007.  They forecast that Q1 2009 would break the record. 

A year ago, they also forecast a quick recovery from the drop in continuing earnings in Q4 2007.

Analysts are pricing in that the bottom is in for the recession.

Here is an update on Robert Shiller's S&P 500 graph.  Going back to 1881, the average P/E ratio using the trailing 10 years of real earnings has been 16.34. As of today, the current P/E ratio is 14.82.  Using the historical average, stocks are slightly undervalued.  However, the stock market has traded at much lower levels in the past.  In 1982 it reached 6.82 times 10 years earnings.  In the Great Depression it reached 5.56 and it reached 4.78 in 1920.

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Case-Shiller Home Price Index now down over 30% from peak

The S&P Case-Shiller home price index for January 2009 was released today by Standard and Poors. The composite-10 declined 2.55% from December 2008 (last month it declined by 2.34%) and declined by 19.39% from a year ago (compared to 19.14% last month). The composite-10 is now down 30.16% from its peak. The Composite-10 has now declined at a faster pace year over year for 25 straight months now.

The CME futures market is pricing in a further drop of -7.45% by next January for the composite-10.

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Existing Home Sales Rise

The National Association of Realtors released the existing home sales figures for February 2009 today. Sales increased to a seasonally adjusted annual rate of 4.720 million units in February up from 4.490 million units in January but down from 4.950 million units in February 2008. The median sales price was $165,400 for February up from $164,800 in January (up 0.4%) but down from $195,800 in February 2008 (down 15.5%).  The January numbers were revised downward from $170,300 as reported last month to $164,800. 

Months supply was 9.7 in February, the same as it was in January.  According to the NAR, currently 40-45% of all transactions are distressed sales.

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Existing Home Sales and Prices Fall

The National Association of Realtors released the existing home sales figures for January 2009 today. Sales decreased to a seasonally adjusted annual rate of 4.490 million units in January down from 4.740 million units in December but down from 4.910 million units in January 2008. The median sales price was $170,300 for January down from $175,700 in December (down 3.1%) and down from $199,800 in January 2008 (down 14.8%). The price decline was again led by the West where the median price declined by 4.2% compared to the previous month dropping from a median price of $229,700 in December 2008 to $220,000 last month. The median home price for the West in July 2007 was at $349,400; the median is now 37.0% lower.

Months supply rose to 9.6 in January from 9.4 in December. This was due to a drop in sales while inventory dropped slightly. According to the NAR, currently 45% of all transactions are distressed sales.

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