US housing soars

Overnight US data was eye-popping. The Case-Shiller 20 city index was released for July and boom! Chart from Calculated Risk:

Data through July 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices … showed increases of 1.9% and 1.8% from June for the 10- and 20-City Composites. For at least four months in a row, all 20 cities showed monthly gains. Phoenix posted 22 consecutive months of positive returns. Although home prices in all the cities increased, 15 cities and both Composites saw these monthly rates decelerate in July versus June.Over the last 12 months, prices rose 12.3% and 12.4% as measured by the 10- and 20-City Composites. …“Home prices gains are holding their 12% annual rate of gain established by the two Composite indices in April,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Southwest continues to lead the housing recovery. Las Vegas home prices are up 27.5% year-over-year; in California, San Francisco, Los Angeles and San Diego are up 24.8%, 20.8% and 20.4% respectively. However, all remain far below their peak levels.“Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined. More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked.”

Despite the highest gains in seven years, it’s the last sentence that is more important. The big bounce is slowing on rate hikes in the bond market, and that market got the message and rallied hard with both the 10 year and 30 year bond yield falling 2% plus. Yields for both now look decidedly toppy:

There may well be some short term support for US stocks in this data but so long as the taper lurks there is nowhere for asset markets to run.