By the Way, House Prices Just Went Up

Yesterday at 9 AM Standard and Poor’s released the latest Case-Shiller Home Price Index data, showing that existing homes actually increased in price in May, for the first monthly rise since July 2006. All the major media outlets ran with it as their lead story, the stock market zoomed up more than 5%, and FedTwo-story_single-family_home Chairman Bernanke announced that the recession is now officially over.

Okay, I made most of that up. But the C-S 20 city composite really was up for the first time in 33 months. And that’s really a big deal, not that anybody seems to have noticed. This is not an index that changes direction often. Before the run of 33 down months was a run of 55 consecutive up months going back to January 2002. (In fact, other than small declines in December 2001 and November 1998, the 10 city index was up every month from March 1997 to June 2006.)

Obviously, there is no guarantee that this will be the start of a long run of positive months, but a change in direction is a comparatively rare event and ought to be newsworthy. All the more so given the centrality of house prices in the causes of the Great Recession. And yet this isn’t apparently a big story.

The New York Times’ web site had nothing on it for most of Tuesday and this morning has a cautious article about first stirrings of hope, but they are leading with the Microsoft-Yahoo deal to cooperate on internet searching. As of 9 AM this morning, you had to scroll down the Wall Street Journal’s site to find a mention of house prices, at the very bottom of the What’s News roundup. Bloomberg also buries it, ranking it the third story under Personal Finance.

Part of this downplaying may be due to the S&P press release from yesterday, which was titled "Home Price Declines Continue to Abate According to the S&P/Case-Shiller Home Price Indices" and managed to save the tidbit that prices rose on a monthly basis for its second page. I really don’t understand what the S&P PR people are thinking. Generally, you try to hype the news your organization has to report, not downplay it.

I am not going to break any new ground observing that the media tends toward the pessimistic when discussing the economy. Partly this is due to the nature of news reporting. Modest growth and prosperity is dog-bites-man. But the Great Recession is great copy, so there’s no rush to report that it is over.

I think there is also something else going on here. The business outlook for the mainstream media is grim. Newspapers are closing and reporters are losing jobs or taking big pay cuts. And although the state of the wider economy is accelerating the decline in traditional media, it’s pretty clear this is not a temporary thing. It’s no wonder that reporters and editors concerned their jobs could suddenly disappear have trouble seeing green shoots and silver linings.

But this is a green shoot. A healthy seedling pushing its nose out of the soil right at ground zero.


  • By Luke, July 29, 2009 @ 11:55 am

    Home prices usually bounce up a bit in May.

    Seasonally adjusted Case-Schiller (accounting for annual summer bumps) is actually down still. In other words, normally, the bump from April to May would be larger than this – consequently, the market is still declining.

    Kudos to the news outlets for not over-hyping this.

    One “green shoot” in this though – the market is now declining less quickly, so that’s a plus.

  • By Darkside, July 29, 2009 @ 11:55 am

    An economic turnaround would be a roadblock to this administration. They need an economic crisis to impose their economic policy and “rally the troops” as it were.

  • By Kent @ The Financial Philosopher, July 29, 2009 @ 12:17 pm

    You are absolutely right when you say, “the Great Recession is great copy, so there’s no rush to report that it is over.”

    The media always lags reality. They attempt to be “current” with sentiment issues, but sentiment is a culmination of emotions built up over time; therefore, “current” is always “past” in this regard.

    For this reason, many contrarians turn bullish when magazine covers show pictures of bears and headlines screaming, “Worst Recession Since Depression.”

    “When we think this present as going to be, it exists not yet; and when we think it is existing, it is already past.” ~ Henri Bergson

  • By gpr, July 29, 2009 @ 2:35 pm

    Generally, you try to hype the news your organization has to report, not downplay it.

    Well, not always. I’ve written tons of releases where the real news was intentionally buried.

    But this is good news, so you’re right. Bang the drums!

  • By Jim, July 29, 2009 @ 2:48 pm

    I saw headlines on the increase in housing prices yesterday. Maybe they were fleeting or just not widely reported. It was on Yahoo news at least, which is what I usually read…

    Reuters & AP covered it:

  • By Frank Curmudgeon, July 29, 2009 @ 9:28 pm

    Luke: Assuming you meant to type “tend to go up” rather than “usually bounce” you make an excellent point. S&P does put out a seasonally adjusted version, to which nobody, including S&P, pays attention. They don’t even format the spreadsheet. If I was in charge seasonal adjusted would be the standard. (Among other changes.) But in the meantime, I feel like I should keep with the numbers everybody else uses. And those long up and down streaks are in the unadjusted index.

    Jim: I didn’t (mean to) say that the numbers went totally unreported, just under-reported.

  • By Jim, July 30, 2009 @ 2:01 pm

    Frank, Yeah it sounds like it was under reported. THe news outlets tend to pick their headlines weird ways IMHO. Sometimes they lean towards the sensational too much which pushes the hard news to page 2. Yahoo is more of a news aggregator so I think they tend to just run the latest headlines and I don’t think they have someone manually deciding which headline to lead with. So with Yahoo you may get more of the straight news and less of what the news editor thinks we all want to read about.

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