Case-Shiller Data: Housing Bottom?

NEW YORK (TheStreet) -- The recent existing-home sales data from the National Association of Realtors showed a continuing downtrend in home prices. The same day, the S&P Case-Shiller Housing Index was released, with data through August.

Prices continued an uptrend that started in April. Is this the leading indicator that shows the housing market will recover?

One day after Case-Shiller, the U.S. Census Bureau new-homes data for September was released. The number making the most headlines was the unexpectedly low number of new-home sales of 402,000. This was well below both the number for August (417,000) and the expected number for September, north of 420,000.

However, more importantly, but not receiving as much attention, the price of new homes continued to decline. The headline for median price was a monthly increase of 2.4% to $204,800. That is very misleading. The August median price was unusually low, dropping 9.5% from July, an all-time one month record.

The September median new-home price was 5% below July, and 9.1% lower than one year ago. If anything, the decline in the median price is accelerating, with more than half of the decline for the past year coming in the last two months. This is a noisy number, however, and inferring that price declines are accelerating based on two months of data isn't justified.

The following graph shows the recent median price history for both the Case-Shiller Composite-10 Index and the Census Bureau new-homes survey. To smooth the new-homes data noise, a three-month moving average is plotted.