Robert Shiller: Home Prices Back at 2003 Levels, Could Overshoot to Downside (Charts, Video)

Robert Shiller, Yale professor and co-founder of the S&P/Case-Shiller Home Price Index, was featured on Reuters TV on 11/30/2011 after the September housing data was released. Guess what people, "Detroit has now recorded three consecutive months of positive annual rates." Below are charts from the S&P/Case-Shiller press release.

New York, November 29, 2011 – Data through September 2011, released today by S&P Indices for its S&P/Case-Shiller

Home Price Indices, the leading measure of U.S. home prices, show that nationally home prices did not register a significant change in the third quarter of 2011, with the U.S. National Home Price Index up by only 0.1% from its second quarter level. The national index posted an annual decline of 3.9%, an improvement over the 5.8% decline posted in the second quarter. Nationally, home prices are back to their first quarter of 2003 levels.

As of September 2011, the annual rate of change in 14 of the 20 MSAs and both Composites, covered by S&P/Case Shiller Home Price Indices, improved versus August. Atlanta, Las Vegas, Los Angeles, San Francisco, Seattle and Tampa recorded lower annual declines in September compared to August. Detroit and Washington DC were the only two MSAs to post positive annual rates of +3.7% and +1.0% respectively. Detroit has now recorded three consecutive months of positive annual rates."

Source: S&P/Case-Shiller Home Price Index Press Release

Source: S&P/Case-Shiller Home Price Index Press Release

During the Reuters TV interview, Shiller said "this was definitely a surprise on the downside, and "I don't see any reason to predict a recovery now". He thinks that high unemployment is weighing on the housing market right now, and is worried that home prices could overshoot to the downside.
"At best we can hope it that it doesn't overshoot. We are back down to normal levels for home prices, but after a crisis they could overshoot and become cheap overall."

I also found a Standard & Poor's interview with Robert Shiller and Karl Case that was conducted on 10/25/2011.

Hat tip ValueWalk

Back in October, Fed Governor Daniel Tarullo talked about the possibility of using large-scale MBS purchases (QE3) to boost the housing market and equities. The FOMC meets on December 13, so we will see what happens. Here are recent articles on what Fed officials are saying. See what the market thinks.

Fed's Bullard: Wait and see on QE3 (CNN Money)
Accelerating U.S. Economy May Put Fed Asset Purchases on Hold (BusinessWeek)
Fed to hold off on easing, finalize policy framework (Reuters)
Chicago’s Evans Says Its ‘Imperative’ for FOMC to Escape Liquidity Trap (Bloomberg)
Fed’s Yellen Sees Scope for More Easing to Spur Recovery (BusinessWeek)
Fiscal deficits hurt Fed's efforts on economy: Fisher (Reuters)
Transcript: Philadelphia Fed President Charles Plosser interviewed by Steve Liesman (CNBC)
Minneapolis Fed's Kocherlakota Says Fed May Need to Reduce Accommodation (BusinessWeek)
Boston Fed’s Rosengren Says Lower Jobless Rate Is ‘Good News,’ Not Enough (Bloomberg)
Scanning the Horizon for the Ship 'QE3' (WSJ)
Time to Accelerate the Housing Recovery (New York Times)