Are Home Prices Rising?

Today, the S&P/Case-Shiller Index came out (.pdf) for the third-quarter. It reports that home prices are increasing. Yet, just yesterday, the National Association of Realtors released its October data (.pdf), indicating that, despite more home sales, prices are declining. These measures appear to contradict one another, so which one should we believe?

The S&P/Case-Shiller Home Price Index reports that its "Composite-20" cities home prices have increased by 0.3% from August to September. That's on top of 1.1% increases in both July and August.

Yet, NAR begs to differ. It reports virtually the opposite. It says that national home prices have declined by 0.7%, 2.3% and 0.3% in September, August and July, respectively. It also offers October data, which shows another decrease of 1.6%.

Here's how this looks on a chart:

As you can see, there's no apparent correlation.

It's not completely impossible that both measures are correct. The S&P/Case-Shiller only considers 20 major cities, while the NAM measure is a national average. So what you could be seeing here is just a variance between those 20 cities and the nation on a whole. If that's the case, then this difference could imply that metropolitan areas are rebounding while homes elsewhere have largely failed to recover.

But that still seems fishy. Those 20 cities are pretty major, so the performance of home prices in those cities shouldn't vastly differ from the rest of the country's average, of which they are a part. At the very least, these two measures shouldn't be so far apart. So it could just explain a difference in the quality of data that these two measures utilize.