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While month to month home prices in August were roughly stable, the end of the summer selling season led to a typical seasonal decline in September among currently available price measures. This seasonal decline generally continues through February.
Compared to one year ago, however, price change was stable from August to September among existing homes—available data show a 3-4 percent year to year decline in both months—while price change worsened somewhat among new homes.
Previously, new homes had shown better price performance over the year; August began the sharp reversal of this trend which continued in September. Low levels of new construction and very little activity in the new home sector may be causing substantial volatility in the data. Additionally, the structure of the first-time home buyer tax credit which had conditions on both the contract and closing dates likely led to lingering effects on the new home market. Expect better year over year price change among new homes in October.
Distressed sales , which hold back existing home prices, continue to comprise about 30 percent of sales—down from nearly 40 percent earlier in the year. However, as housing faces a seasonal slowdown, it is possible that distressed sales as a share of total sales will rise even as the number of distressed sales remains largely constant.
The increase in the share of distressed sales may bring reported transaction prices down somewhat. Of course, the price reduction depends on the condition of the distressed property. Nearly two-thirds of distressed properties are in average or better-than-average condition which may help to lessen the downward impact on prices.
Stable-to declining inventories should help to support prices, though buyers searching for the right home may have fewer options from which to choose. Very limited new construction means that buyers initially searching for a new home may find more selection among existing homes.
Home Prices Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER
Home Price Data – Year over Year Change Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER
Home Price Changes *All data are not seasonally adjusted. Monthly changes should typically be computed only for Seasonally Adjusted (SA) data. Because these change rates are often covered in the media regardless of their suitability for analysis, they are presented here but should be used with caution. Annual (yr-over-yr) changes computed for Not Seasonally Adjusted (NSA) data give a measure that is not affected by seasonal fluctuations. Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER
Spread of Existing Home Price Changes Year over Year Sources: NAR, Case-Shiller, CoreLogic, FHFA, HAVER
Supply and Demand Factors – Inventory Sources: NAR
Supply – New Housing Starts and Permits Sources: Census
Underlying Demand – Job Growth and Hires Sources: BLS