The S&P Cotality Case-Shiller Index is published at 9AM EST tomorrow. The index, which goes back to 1890, tracks repeat sales of single-family homes across the U.S. and is one of the key metrics on the state of the housing market. Tomorrow’s report will reveal data from February, and is likely to continue the trend of nearly flatlining growth – mortgage rates remained high and the month was exceptionally cold.

  1. The question is whether home prices will continue to fall behind inflation

Monthly increases in the Case-Shiller have hovered around 1-2% for the past seven months. The rate has consistently been lower than inflation over the same time period, meaning that average home values are effectively falling. This is not in itself a bad thing – home prices were on a tear between 2021 and 2024 – but it does reflect high mortgage rates, economic insecurity, and affordability concerns. 

  1. Take a closer look at Cleveland and Phoenix

There are clear geographical variations in the national trend. Cities in the northeast have far outperformed the average, while the Sun Belt has seen declines even in real terms. Two telling outliers are Cleveland and Phoenix. The Ohio city saw an increase of 3.56% in January, while Arizona’s capital declined -1.59%. Check how these change to see if the pattern is holding. 

  1. Remember that February was freezing

February was an atypically cold month, with multiple snow storms that swept across the country and ground businesses to a standstill. The effects were also seen in that month’s employment report, which clocked in at a loss of 92,000 jobs. Cold weather is known to slow down home sales too – plus, the main season for real estate brokerage only starts in March. All this means it is unlikely for there to be a rebound in tomorrow’s report. 

  1. To see the effects of the war, you’ll have to wait 

One of the main concerns in the past months has been to what extent the war in Iran will impact the domestic economy. The housing market is a telling gauge for whether the added economic insecurity and higher energy prices have led consumers to put big purchases on hold. Alas, watchers of the Case-Shiller will have to wait at least another month. The war began on February 28, meaning the effects can be seen at the very earliest in the March report. 

  1. Don’t expect big surprises

The Case-Shiller is calculated using a rolling three-month average of sales, in order to smooth out any blips in the market and to make sure there is enough data for each metro area. This means the monthly reports rarely deliver major surprises. Still, it gives a reliable overview of the housing market, one of the pillars of the U.S. economy.

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