Case-Shiller publishes a home price index on the last Tuesday of the month. The index measures the price of a three-month moving average and is published with a two month lag. In January, the report is showing the index for home prices in November 2011.
November saw a continuation of the softening of housing prices. In only 3 of 20 markets measured did the prices rise, fully 17 of 20 saw a decline. This continues a trend that started roughly in early summer 2010.
Beginning in 1996/1997, the index reported a near continuous climbing of home prices. This trend continued until the spring of 2006; nearly 10 years. Beginning in last spring 2006, home prices crashed. Many markets lost nearly half their value; others only significant portions. However, the crash subsided in early summer of 2009.
The brief respite of 2009 lasted nearly 12 months. Home prices stabilized and some markets saw modest improvements. Since early 2010, however, we have seen the continuation of the 2006 crash, or, if you will, a second crash. With the exception of just a few markets, home prices have continued to slide, though much more gradually than the pattern that was exhibited in 2006 and beyond.
I suspect what we’re seeing is the continuation of the self correction. Efforts to save homeowners in trouble are wearing off and natural foreclosures are occurring. As each individual market begins to clear, the prices will again begin to rise. Already we’re seeing less home for sale today than we saw 12 months ago.