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Is Case-Shiller home sales index falling behind the times?
Updated 8/28/2012 10:49 AM ET
As Wall Street scruitinizes Tuesday's report on home sale prices, some experts argue that the gold-standard index for tracking the market may be falling behind the times.

The Standard & Poor's Case-Shiller index for home sales that closed in June showed a 0.5% rise from this time last year and a seasonally adjusted gain of 2.3% from May. But data compiled by real estate sites such as Trulia.com suggest asking prices are now rising faster.

Are higher asking prices unrealistic, or is Case-Shiller compiled too slowly to catch the turn? And do higher asking prices signal an approaching return to mid-single-digit annual appreciation, after housing's 33% tumble since 2006?

"It suggests that we'll continue to see increases in the Case-Shiller at least through September, which will be the sales they report in November," Trulia chief economist Jed Kolko said.

Case-Shiller's data are relatively slow for two reasons. The homes it reports on have to be sold. Second, the laborious process of compiling data from top markets to calculate the national index takes long enough that June figures are just coming out. Prices for those homes may have been set as long ago as March or April. Case-Shiller's authors think that's a worthy tradeoff for greater accuracy, says David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

In the meantime, asking prices rose 1.2% in the three months that ended in July, compared with the prior three months, according to Trulia. They climbed 4% or more in at least 10 markets, including Birmingham, Ala., and Omaha.

The situation is "being created by smaller inventories" of homes for sale, said Everett King, president of ERA King Real Estate in Birmingham. Pent-up demand and fewer homes on the market are letting sellers charge about 5% more than six months ago, he said. "Anything between $350,000 and $400,000 just goes at the asking price."

Opinion is divided over whether this can last.

Realogy, parent company of Coldwell Banker and Century 21, said Aug. 7 that July sales prices rose by "mid-single digits," which it expects to last through year's end. At HomeServices of America, the second-biggest national realty firm, executives said higher asking prices are sticking in many markets.

In Omaha, the ratio of the final selling price to the original asking prices has actually climbed, said Joe Valenti, president of HomeServices' CBSHome unit. In Tucson, Long Realty CEO Rosey Koberlein said recent sellers are getting 96% of their asking price on average. "Buyers and sellers are being realistic," Koberlein said.

But the jump may prove premature, said Stan Humphries, chief economist at Zillow.com.

Slower job growth in the second quarter, plus expectations of slower second-half expansion and federal budget austerity next year, could scare buyers, he said. And a shortage of lower-price homes for sale may be inflating asking prices, he added.

"I hesitate to say, 'Don't look at (asking prices),' but a lot is going on," he said.

Posted 8/27/2012 7:28 PM ET
Updated 8/28/2012 10:49 AM ET
A sign on a condo for sale in Seattle.
Elaine Thompson, AP file
A sign on a condo for sale in Seattle.