We believe home prices were actually up 0.3% from April to May while broadly followed indices reported them flat to negative. We believe that homes transacted between investors and consumers create false signals when they are included in home price indices resulting in overstated volatility and seasonal adjustments. In the last few years, consumer-to-consumer volume has risen while investors/consumer volume has declined, which we believe is causing these indices to produce erroneous signals. The Amherst home price indices control for these factors and conclude that there is no shift in housing momentum in recent months. Of the top 20 MSAs, 18 continue to show monthly increases in home prices in May, with San Francisco and New York the only two areas declining. Many other areas like Portland, Seattle and Dallas continue to grow strongly.

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