S&P/Case-Shiller: May 2013

Today's release of the S&P/Case-Shiller (CSI) home price indices for May reported that the non-seasonally adjusted Composite-10 price index rose a notable 2.48% since April while the Composite-20 index also increased 2.44% over the same period.

The latest CSI data is continuing to demonstrate significant resiliency compared to past years, as prices remained stable through the typically slow winter and early spring period and now appear to be rising notably through the more active late spring period.

The 10-city composite index increased 11.82% as compared to May 2012 while the 20-city composite increased 12.17% over the same period.

Both of the broad composite indices still show significant peak declines slumping -25.01% for the 10-city national index and -24.39% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com to view the full release.

Conspicuous Correlation: Retail Sales August 2012

Today, the U.S. Census Bureau released its latest nominal read of retail sales showing an increase of 0.9% from July and an increase of 4.7% on a year-over-year basis on an aggregate of all items including food, fuel and healthcare services.

Nominal "discretionary" retail sales including home furnishings, home garden and building materials, consumer electronics and department store sales increased just 0.24% from July and a tepid 1.93% above the level seen in August 2011 while, adjusting for inflation, “real” discretionary retail sales increased a slight 0.24% over the same period.

On a “nominal” basis, there had appeared to be “rough correlation” between strong home value appreciation and strong retail spending preceding the housing bust and an even stronger correlation when home values started to decline.

The following chart shows the year-over-year change to nominal discretionary retail sales and the year-over-year change to nominal the S&P/Case-Shiller Composite home price index since 1993 and since 2000.

As you can see there is, at the very least, a coincidental change to home values and consumer spending during the boom and then the bust, but as home values have continued to decline, retail spending has remained low but has not continued to consistently contract.

Looking at the chart below (click for full-screen dynamic version), adjusted for inflation (CPI for retail sales, CPI “less shelter” for S&P/Case-Shiller Composite) the “rough correlation” between the year-over-year change to the “discretionary” retail sales series and the year-over-year S&P/Case-Shiller Composite series seems now even more significant.