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MinnEcon Blog
Bill Catlin

More confirmation of a spring housing rebound

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The much-cited S&P/Case-Shiller Home Price Indices out Tuesday provided yet more confirmation of a firming housing market in Minnesota and nationally in the month of May.

(The Case Shiller numbers lag other housing metrics, no doubt because the methodology must require a lot of hunting. The index uses " data on properties that have sold at least twice, in order to capture the true appreciated value of each specific sales unit.")

According to the index, Twin Cities home prices rose 1.3 percent from April to May (that's on a seasonally adjusted basis), and almost 1 percent compared to May of 2011 (that's on a seasonally adjusted basis).

Those aren't necessarily big jumps, and prices remain far below their pre-recession highs.

Minnesota Public Radio's Jess Mador reports that S&P's Maureen Maitland is urging caution. "This may not be the recovery, but the last couple months of data have been more positive than negative, so there definitely is a glimmer of hope," Maitland said. "But you have to be patient and wait a few more months and see what the rest of 2012 is going to tell us."

Still, a positive trend is fairly evident, and the Twin Cities is improving faster and sooner than the composite index encompassing 20 major metropolitan regions.

The Bottom

The Twin Cities registered the lowest (seasonally adjusted) index reading in November of last year. The 20-City index bottomed in January.

[image]

Since hitting bottom, prices have risen 5 percent in the Twin Cities, 3 percent among the 20 composite cities.

The Rebound

The non-seasonally adjusted numbers show a similar pattern, when compared to the same month a year before.

The rate of annual decline in Twin Cities home prices started slowing in June of 2011, and prices notched gains starting in February of this year. The rate of increase has grown from 1 percent in February to 5 percent in May.

[image]

The Case/Shiller numbers are consistent with price data compiled by the Minneapolis Area Association of Realtors show.

MAAR reports the median sales price in the Twin Cities bottomed in February at $138,000, and rose to nearly $179,000 as of June.

So, while there's still a lot of hill to climb, the market appears to be gaining elevation after a long descent.