Steady Case-Shiller Housing Index Gets Mixed Reactions

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In twenty major cities tracked by the Case-Shiller Home Price Index, the market value of houses leveled off in October, failing to continue the growth seen in previous seasons. Because housing prices are expected to slump a little in the fall when fewer buyers are looking for homes, this can be seasonally adjusted to reflect some positive news. But economists are having mixed reactions to this, set to a backdrop of an otherwise gradually recovering economy. Some worry that this leveling off of prices (which actually dipped in some cities), despite low mortgage rates and government tax credits available to encourage sales, is a sign that prices could start going down again. That and the fact that some interest rates are on the rise, making it that much harder to afford a house, has some worried, according to the Times this morning. “If prices sink 15 percent from here, which is a possibility, and the 2008 and 2009 loans go bad, then we’re back where we were before," fretted Karl E. Case, one of the economists who designed the housing index, "in a nightmare."

But others, like economist Joel Naroff, think that in general, year to year, the trend will still be upward as of next spring. "Look for prices to slowly rise going forward and that is good," he wrote. "We don't need the housing market to start bubbling up again."

Case-Shiller Points To Winter Chill, But Not Housing Doom [WSJ]
New Slip in Housing Prices Undercuts Fragile Optimism [NYT]