by Calculated Risk on 9/23/2012 12:53:00 PM

I've mentioned this before, but it is probably worth repeating ...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.

• There is a seasonal pattern for house prices. Prices tend to be stronger in the spring and early summer, and then weaker in the fall and winter.

• Currently there is a stronger than normal seasonal pattern. This is because conventional sales are following the normal pattern (more sales in the spring and summer), but distressed sales (foreclosures and short sales) happen all year. So distressed sales have a larger negative impact on prices in the fall and winter.

• Two of the most followed house price indexes are three month averages. This means the indexes lag the month-to-month change. The Case-Shiller report for "July", to be released on Tuesday, is actually an average of May, June and July. The CoreLogic index is a three month average, but weighted to the most recent month. Prices have probably started declining month-to-month seasonally in August or September, but this will not show up in the indexes for several months. (Several real estate agents have told me the seasonal slowdown has started in their areas).

• 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 (through July) and NSA Case-Shiller Composite 20 index (through June) over the last several years. There is a clear seasonal pattern.

Right now I'm guessing the CoreLogic index will report negative month-to-month price changes for August or September, and Case-Shiller for September or October. Just something to be aware of ...

Yesterday:
• Summary for Week Ending Sept 21st
• Schedule for Week of Sept 23rd
• Goldman Estimate: QE3 could be $1.2 to $2.0 Trillion