by Calculated Risk on 12/01/2013 10:45:00 AM

I expect the CoreLogic index - the index is Not Seasonally Adjusted (NSA) - to decline month-to-month in the October report.  The Case-Shiller index (NSA) will probably turn negative month-to-month in the November report.  This will not be a sign of impending doom - or another collapse in house prices - it is just the normal seasonal pattern.

Even in normal times house prices tend to be stronger in the spring and early summer, than in the fall and winter. Currently there is a stronger than normal seasonal pattern 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.

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 (both through September 2013). The CoreLogic index will probably turn negative in the October report (CoreLogic is a 3 month weighted average, with the most recent month weighted the most). Case-Shiller NSA will probably turn negative month-to-month in the November report (also a three month average, but not weighted).


The second graph shows the month-to-month change since January 2000.  Notice the seasonal patterns were much smaller prior to the collapse of the housing bubble.

At some point the large seasonal differences should diminish as the volume of distressed sales continues to decline.

Note: The Zillow index already indicated a slight month-to-month decline in October (Zillow excludes foreclosures, so the seasonal swings are not as large as for the Case-Shiller NSA and CoreLogic indexes):

Zillow’s October Real Estate Market Reports ... show that national home values declined 0.1% from September to October to $162,800. On a year-over-year basis, home values were up 5.2% from October 2012 ... These annual and monthly trends are in line with a broad and robust housing recovery that is starting to slow down as home value appreciation rates fall back to more sustainable growth levels.