From the Economist:
On fundamentals, America’s housing market looks increasingly healthy. Inventory levels and vacancy rates are way down and rents are up. At the national level, the entirety of the price boom between 2000 and 2006 has been unwound and then some. Mortgage markets are still clogged, but investors are moving properties from owner-occupied to rental status with gusto. And yet, as the quote above indicates, prices are still dropping. What gives?
One major issue is the serious limitations of housing market data. Take the Case-Shiller index. Its monthly figures are a three-month moving average, which means that the January numbers are an average of prices reported in November, December, and January. And Case-Shiller gets its data when closed sales are officially reported, which means that the figures could include sales the contracts for which were signed as far back as September. It’s now closer to September of 2012 than to September of 2011!
There’s a glaring data hole, in other words, and Jed Kolko, chief economist at Trulia, is endeavouring to fix it. Today, he unveiled a new price and rent monitor built on listings at Trulia.com. Mr Kolko writes that final asking prices are a good predictor of sales prices—but are available months before the closing sale price. By taking asking prices and rents and adjusting them for property characteristics, he reckons he can put together a useful indicator of home prices with a much shorter turnaround time. And what does the inaugural monitor say about housing-market conditions?
Nationally, asking prices on for-sale homes were 1.4% higher in March than one quarter ago. Prices increased month over month by 0.9% in March and 0.6% in February. What we found through the Monitor is that asking prices had been declining prior to February and reached a low in January 2012. Throughout 2011, asking prices rose slightly in several months of the year, but never more than 0.2% in a month. Asking prices in March were 0.7% below their level one year earlier.
One thing to keep in mind — because the Trulia Price Monitor is seasonally adjusted, these monthly and quarterly increases are on top of typical springtime price jumps. Without adjusting for seasonality, asking prices rose 2.4% quarter over quarter.