S&P/Case-Shiller Home Index Contracted Sharply in July

Home prices were contracting sharply in July, down 0.5 percent for the third straight decline and the steepest monthly decline in Case-Shiller 20-city seasonally adjusted data going all the way back to November 2011. The reading is below the low end of the Econoday consensus and far below the 0.1 percent gain that was expected. The year-on-year rate, which has been coming down steadily all year from the low double digits, is at plus 6.7 percent for the lowest reading since November 2012 and down sharply from 8.0 percent in June.

Fourteen for the 20-city sample show declines in the month with Chicago and Minneapolis showing the most severe declines, at minus 1.6 percent in the month. Three cities show no change leaving three with gains led by Las Vegas at only plus 0.3 percent.

Unadjusted data are tracked closely in this report and, year-on-year where adjustment factors are neutralized, tell the same story for July with the 20-city sample at plus 6.7 percent vs June's unadjusted 8.1 percent. But the month-on-month reading, reflecting seasonal pricing strength tied to favorable weather, shows a gain, at plus 0.6 percent which however is down from 1.0 percent in June and 1.1 percent in the two prior months.

Eroding home prices are a negative of course for homeowner wealth but are a positive for sales which have been sagging.

The S&P/Case-Shiller 20-city home price index (SA) showed home price appreciation for June continuing to unwind, showing a 0.2 percent decline, following a 0.3 percent decline in May. Year-on-year, the adjusted rate was a slower plus 8.1 percent versus 9.3 percent in May. Monthly declines swept 13 of the 20 cities with Minneapolis, Detroit, Atlanta and Chicago showing special weakness.