by Calculated Risk on 8/08/2012 04:53:00 PM

Sometimes it helps to state the obvious in advance ...

The Not Seasonally Adjusted (NSA) house price indexes will show month-to-month declines later this year. This should come as no surprise and will not be a sign of impending doom.

The key is to watch the year-over-year change and to compare to the NSA lows earlier this year. I think house prices have already bottomed, and will be up slightly year-over-year when prices reach the usual seasonal bottom in early 2013.

Click on graph for larger image.

This graph shows the month-to-month change in the CoreLogic and NSA Case-Shiller Composite 20 index over the last several years. There is a clear seasonal pattern. In recent years the seasonal pattern has been exaggerated by the large number of foreclosures - foreclosures tend to be fairly steady all year, but conventional sales are stronger in the spring and early summer, and weaker in the fall and winter. This leads to more downward pressure from foreclosures in the fall and winter.

Note: The CoreLogic index tends to lead Case-Shiller. Both are three month averages, but CoreLogic is weighted to the most recent month.

Right now I'm guessing both indexes will report negative month-to-month price changes for August or September (reported in October or November). Just something to be aware of ...