As I mentioned in a blog from last week, four times per year, as CME Case-Shiller futures contracts expire, we get a chance to contrast the accuracy of “market expectations” in predicting the actual Case-Shiller numbers. This moth (Nov) was one of those opportunities.
For the first time in recent memory, the actual results of the 11 indices traded on the CME (the national CUS index, and the ten regional indices) all came out within the bid/asked range of the futures quotes the week before the close.
Not only did the bid/ask spreads bracket the actual results, but the the contracts that were “expected” to perform worse (LAV -1.13%, SDG -1.56%, and SFR -1.26%) were two of the worst three performers. Additionally, the two contracts with (relatively) the best “expectations” (NYM -0.23%, and WDC -0.28%) were the two best performing indices (and the only two that rose Month-On-Month).
The fact that the actual Case-Shiller indices were in line with market expectations may be the reason that there has only been one trade today. In prior months when the release of 4-6 Case-Shiller indices were outside the final CME market bid/ask spread, there was more trading.
So….I’m pleased to see that market prices can be used as a very valuable tool (one of many) in analyzing forward home prices.