Tradex Global Commentary: Case-Shiller Home Prices - April

TRADEX GLOBAL INTERNAL COMMENTARY

The Case-Shiller Index, which is a key measure of home prices in large US cities, rose 0.7% in April.  This was better than consensus, which was +0.3%. Home prices declined 1.9% YoY, which is the smallest 12-month drop since November 2010.  We continue to see a stabilization of prices as the massive shadow inventory is eaten into.  Interest rates continue to be at historic lows, and are expected to remain low for at least another year or two, adding to the affordability of homes.  Europe remains a major concern and equity markets are nervous, but this news was relatively positive.  Keep your hedges on… – Richard Travia

EXTERNAL RESEARCH COMMENTARY

Residential real estate prices fell in April at the slowest pace in more than a year, adding to signs the U.S. housing market was firming. The S&P/Case-Shiller index of property values in 20 cities dropped 1.9 percent in April from the same month in 2011, the smallest decline since November 2010, after decreasing 2.6 percent in the year ended March, the group said today in New York. The median forecast of 28 economists in a Bloomberg News survey projected a 2.5 percent drop. A turnaround in prices is a necessary step toward luring more buyers and sustaining demand for housing, which is starting to stabilize after precipitating the last recession almost five years ago. Record-low borrowing costs, due in part to Federal Reserve efforts to hold down long-term rates, may keep promoting home sales in the presence of an 8.2 percent unemployment rate. “Housing has picked up since the middle of last year,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York, who correctly forecast the monthly gain in prices. “Sales have improved and the inventory of homes for sale has been falling, which has brought a bit more balance into the market and fed into a bit of stabilization of prices.” Estimates in the Bloomberg survey ranged from declines of 1.7 percent to 3.1 percent. The Case-Shiller index is based on a three-month average, which means the April data was influenced by transactions in March and February.

Tradex Global Advisory Services, LLC

investorrelations@thetradexgroup.com 

203-863-1500

@Tradex_Global