Case-Shiller housing numbers down, yet there are better local gauges

The new Standard & Poor’s/Case-Shiller Home Price Index was released today, revealing that at least 10 markets – including Seattle – hit their lowest levels since home prices peaked in 2006 and 2007.

The index revealed declines in 19 cities from January to February. The index fell for the seventh straight month. Prices fell at a faster rate in 11 markets in February compared with the previous month.

High unemployment, stricter lending rules and fears that prices will fall further are among the reasons why few people are buying and selling homes. A record number of foreclosures are forcing down home prices in most metro areas, and prices are expected to keep falling through this year, the index reported.

The Case-Shiller index measures sales of select homes in those cities compared to January 2000. For each of the 20 metro areas it studies, the index provides an updated three-month moving average price. By measuring the sales price of the same homes over time, the index attempts to gauge true market values.

While the latest Northwest Multiple Listing Service stats also show median prices down, it’s often a better indicator of the “Seattle” market. Case-Shiller does not track condominiums – anywhere. It also does not follow new housing sales and focuses mostly on Metro areas.

The Case Shiller survey blends foreclosure sales with non-foreclosures which often underestimates the value of homes outside the “desperate” category. The deep discounts in foreclosures and short sale prices often skew the numbers in neighborhoods where there few of both.