Tuesday, June 23, 2009

OFHEO: Little Housing Price Change

The OFHEO (now known as the FHFA) reported this morning that housing prices fell slightly from March to April. However, note that construction prices fell significantly from March to April. If these indices are right that construction costs fell more than housing prices, then residential construction activity should stop falling. In other words, the news to me in today's report is that housing prices did not fall as much as construction costs.

The chart below graphs the OFHEO housing price index, expressed as a ratio to the PPI for residential construction.

The NAR housing price measure showed a decrease March to April, but showed an INcrease April to May, with May's value higher than March's. We'll see next week whether the Case-Shiller housing price index shows anything like these others.

1 comment:

stilettoheels said...

Do me a favor. Respond to this and post the link to the PPI residential construction inputs (costs). Thank you.

My experience in building/intermediating the structures and not staring at it from an ivory tower window view (apparently your window has a limited view of capped projects in the Windy City) is that there is no correlation between costs and FHFA price.

If not, why post the chart?

Of course, on the price structure, you know that RadarLogic is flat, FirstAmerican (Bernanke's preferred source since you have a tendency to wax and wane about monetary policy) is down and all the seasonal algorithms seem somewhat suspect.

NSA new home sales are a bitch in the academe, no.