A home price index published by Clear Capital, a real estate valuation firm that serves banks, shows a “sudden and dramatic” drop in home prices over the past two months.
The index shows a 5.9% drop in the two months ending October 11. Click on the graph at left to see the index’s latest movement.
From the press release announcing the findings (“Special Release,” Oct. 22):
“Clear Capital’s latest data shows even more pronounced price declines than our most recent HDI market report released two weeks ago,” said Dr. Alex Villacorta, senior statistician, Clear Capital. “At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration.”
This special Clear Capital Home Data Index (HDI) alert shows that national home prices have declined 5.9% in just two months and are now at the same level as in mid April 2010, two weeks prior to the expiration of the recent federal homebuyer tax credit. This significant drop in prices, in advance of the typical winter housing market slowdowns, paints an ominous picture that will likely show up in other home data indices in the coming months.
Clear Capital uses a paired-sales methodology similar to Case-Shiller and the chart attached shows that the CC index has closely tracked Case-Shiller. (Note that C-S is released with a lag, so we do not have C-S data yet for the period described by Clear Capital in this report.) Paired sales is the most accurate methodology for determining the level of home prices.