The typical seasonal month-to-month decline seen in NAR’s September home price data is now seen among other home price measures. The notable exceptions are the FHFA price index and the CoreLogic distressed-excluded house price index which each showed a small increase for the month.
Compared to one year ago, however—a comparison that helps us see past seasonal fluctuations—price change remains roughly stable. September data show a 1-4 percent year to year decline, about the same as August.
NAR data suggest that the decline from October one year ago may be somewhat larger than September, but will be within the range of what has been seen this year.
New home prices continue to fluctuate greatly due to low levels of construction and purchase activity. As called for in last month’s monitor, new homes saw an increase in prices compared to October one year ago, but continued volatility will be the norm in the near future.
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. The seasonal slowdown may lead to an increase in distressed sales as a share of total sales 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.
Low inventories , declining delinquency rates , and relatively stable buyer traffic 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.
Client pricing expectations may continue to present challenges. New data recently released from the Profile of Home Buyers and Sellers show that sellers typically sold their homes for 95% of the listing price, and 61% reduced the asking price at least once.
Affordability remains high and job opening and hiring data are showing signs of improvement. An improving economy coupled with affordability could not only provide a needed jolt to primary residence sales, but may also spur investment and vacation home purchases. New NAR data on these types of sales will be out in the first quarter of 2012.
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
Potential Job Growth – Openings Sources: BLS
Housing Affordability Sources: NAR
About the Price Data Series Sources: NAR, Case-Shiller, CoreLogic, FHFA, Census, HAVER