The FHFA and S&P Case Shiller published home price index data last week for the month of November. Both showed moderate month-over-month declines offset by still-high year-over-year numbers. Today's CoreLogic home price data paints a similar picture (but for the month of December) with a modest 0.4% decline month-over-month and a 6.9% annual growth rate. 6.9% is still on the higher end of historical norms from before the post-pandemic boom, but CoreLogic goes a step farther by updating forecasts in addition to the hard data. The firm sees next month's year-over-year number dropping to +3.0%. Bad news, right?! Not so fast... We have to remember the economic phenomenon of "base effects." This means that annual numbers can and will change--sometimes substantially--just because data from 12 months ago falls out of a calculation. So while this month's year-over-year number includes last December, next month's won't. If last December was a strong month (it was), that would make the new year-over-year number look like it fell a lot. Interestingly enough, the same forecast that delivers the big drop in annual price appreciation also shows a slowdown in price losses with January only seen losing 0.2% to December's 0.4%. The slowdown is more evident in Western states. The following chart shows the percent change in prices vs last year. All Western states came in under the 5% mark (and Idaho was the lone state that posted a decline).
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