New housing index to contend with S&P/Case-Shiller

Herb Tousley from the University of St. Thomas recently released the results of his Residential Real Estate Market Index, which is based on recent data from the Regional Multiple Listing Service, such as sale price, market time and new listings, The Star Tribune reported.

Unlike the Case-Shiller report, which includes foreclosures and short sales in the calculated price change percentage, Tousley's index does not allow distressed sales to to skew the sales data. According to the news source, Tousley's index tracks prices for traditional sales and distressed sales separately, resulting in less harsh declines in price.

The Twin Cities metro area in Minnesota is regularly reported as having the biggest price declines in recent Case-Shiller reports. Tousley, however, said the declines are due to a high percentage of foreclosures hitting the market at one time, as well as the way in which lenders process the listings and put them on the market, reported the news source.

According to Tousley, normal homeowners have experienced decreased values in their home, but his index shows they are "in better shape than they thought they were," he told the news source.

Homeowners are also experiencing low interest rates and refinancing options. According to the Freddie Mac second quarter refinance analysis, 77 percent of homeowners who refinanced in the second quarter of 2011 either maintained their current loan amount or lowered their principal balance. The report found the median interest rate reduction for a 30-year fixed-rate mortgage to be 1 percentage point, which could save a borrower over $1,550 in interest payments on a $200,000 loan in the first year.  

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