Dean Baker: "Rising Mortgage Rates Did Not Affect June Case-Shiller Data"

Dean Baker beat me to this: Rising Mortgage Rates Did Not Affect June Case-Shiller Data

The Washington Post ... article today on the Case-Shiller June price index attributed the slower price growth in part to higher interest rates. This makes no sense.

The Case-Shiller index is an average of three months data. The June release is based on the price of houses that were closed in April, May, and June. Since there is typically 6-8 weeks between when a contract is signed and when a sale is completed these houses would have come under contract in the period from February to May. This is a period before there was any real rise in interest rates.

... We will first begin to see a limited impact of higher interest rates in the Case Shilller index in the July data and the impact of the rise will not be fully apparent until the October index is released.

One addition: we will not see any impact of higher mortgage rates until at least the "August" Case-Shiller report is released (see earlier post), and - as Baker notes - the impact will not be fully apparent in the Case-Shiller index until the "October" report is released because of the 3 month average. However other prices indexes - like Zillow and LPS - will pick up any impact sooner.