Influential Home Price Indices Paint Fuzzy Picture

 

S&P/Case-Shiller Indices use repeat sales of the same houses to calculate changes in home prices. The index family includes 20 regional indices and two composite indices aggregated across metropolitan areas. The indicates were assigned a base value of 100 in January 2000, so an value of 120 today would indicate a 20 percent appreciation in the typical home's value.
Courtesy of Mortgage News Daily

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There are four housing indexes that the country looks to for information on the state of the market.  According to a report from Standard & Poors (S&P), none of them, either individually or in the aggregate, provide a full picture of what’s going on in housing. This presents a possible concern because of the reliance of both government and industry on these reports to form and react to policy decisions.

S&P said that the four reports, The Federal Housing Finance Authority (FHFA) Purchase-only Index, First American CoreLogic's LoanPerformance Index, the National Association of Realtors®(NAR) Median Home Price Index, and the S&P/Case-Shiller Index; each collect data at least somewhat differently. Data lags the reporting month by an average of 60 days. It's no easy task to get a consistent view of the sector's health. It's not uncommon for market participants to form different opinions about what they think the future will hold in the housing market.

The financial services company maintains the stance that there is an inherent sampling bias in the reports because they include homes with values determined through an actual sale while excluding those without any hard price information or even excluding only one price observation.

– Courtesy of Mortgage News Daily