Meet the Author

David E. Altig |

Vice President

David Altig was formerly vice president and associate director of research at the Federal Reserve Bank of Cleveland. Dr. Altig’s research is primarily focused on monetary and fiscal policy issues.

Meet the Author

Brent Meyer |

Economist

Brent Meyer

Brent Meyer is a former economist of the Federal Reserve Bank of Cleveland.

01.22.07

Economic Trends

New Cities Added to Case-Shiller Home Price Indices

David E. Altig and Brent Meyer

One of the more closely watched indicators of residential housing activity is the Standard & Poor’s S&P Case-Shiller index, which tracks housing prices in select markets across the country. Until recently, individual-market and composite indices (measuring the average across markets) were restricted to the areas represented by 10 cities -- Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C. Last month an expanded index was introduced that includes 10 more metropolitan areas -- Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle, and Tampa.

Although the broader 20-market price index did not quite reach the heights of the 10-market index over the 2002-2004 “boom” period, the fall-off in the growth rate in prices has been just as dramatic:

Case Shiller Home Price Indices

Source: Standard &Poor’s S&P Case-Shiller Home Price Indices, Fiserv, MacroMarkets.

The experiences of the markets in the original set of 10 cities have been relatively similar over the past five years -- very robust housing-price growth early on followed by a sharp decline, commencing sometime during the past year to year-and-a-half:

Case Shiller Home Price Indices

Source: Standard &Poor’s S&P Case-Shiller Home Price Indices, Fiserv, MacroMarkets.

The experience in the markets added to the make the composite 20 index has been more diverse. Several of the cities chosen had experiences similar to those in the composite 10 -- and, given the regions represented by the “hot 10,” their locations are probably not surprising:

Case Shiller Home Price Indices

Source: Standard &Poor’s S&P Case-Shiller Home Price Indices, Fiserv, MacroMarkets.

Another set, which includes the Cleveland metropolitan area, did not experience the really rapid (better than 5 percent per year) acceleration in property values seen elsewhere -- though that has not made these areas immune from the recent slowdown in the pace of price appreciation:

Case Shiller Home Price Indices

Source: Standard &Poor’s S&P Case-Shiller Home Price Indices, Fiserv, MacroMarkets.

Then there is the “none of the above” category: Among the markets recently added to the Case-Shiller calculations, the behavior of house prices in the Minneapolis and Charlotte metro areas have been somewhat unique, with the pace of price appreciation over the past five years falling steadily in the former and rising steadily in the latter.

Case-Shiller Home Price Indices

Source: Standard &Poor’s S&P Case-Shiller Home Price Indices, Fiserv, MacroMarkets.