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Using The Case-Shiller Index To Predict The End Of The Recession

For May, the Case-Shiller Index showed home values up in 15 of its 20 tracked U.S. markets. It’s the first time in nearly 3 years that the index showed such strength and a signal that home prices may be turning higher for good.

According to a Case-Shiller Index spokesperson, “this could be a signal that home price declines are finally stabilizing.”

However, just because the Case-Shiller Index indicates home values are stabilizing, doesn’t necessarily make it true. Real estate is a local phenomenon and the Case-Shiller Index tracks just 20 U.S. cities.

Residents of every other town are unaccounted for.

Additionally, even within the 20 tracked cities, there are distinct neighborhoods and pockets that are under-performing the general market — just as there are those that are over-performing. The Case-Shiller Index can’t get that granular.

Despite its imperfections, the Case-Shiller Index remains a helpful, broader measurement of U.S. real estate. Economists believe that housing led the U.S. into the recession and they believe housing will lead us out, too.

If that’s true, May’s figures are the next step in the right direction.