House Price Datapoint of the Day

The National Association of Realtors has a hard time this month spinning their own data release:

The national median existing-home price for all housing types was $203,100 in August, down 9.5 percent from a year ago when the median was $224,400.

This looks even worse when you get out last month's release:

The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.

When the annual rate of change rises to 9.5% from 7.1%, that's bad. But look at it another way, and it's much worse. Over the past year, the median house price has fallen by $21,300. And over the past month, the median house price has fallen by $9,300. Which means that 44% of the drop in house prices over the past year took place in the last month.

Now year-on-year statistics are generally more useful than month-on-month statistics, so it's important not to read too much into this, especially given the low level of housing sales in August of any year, let alone this one. I'm reasonably hopeful that the median house price will go back up in next month's release. But still, it's a sobering indication that even the rate of change of house price declines isn't showing any grounds for hope.

Comments

[Jackson Cash:]

GOOD! Keep the values PLUMMETING!!!

They were inflated to begin with and this is the recovery we need. Those of us whom made and continue to make prudent housing decisions will be just fine -- our reward will come when we land the houses of our dreams by earning them.

NO FREE HOUSING TO ILLEGALS!

2008 Sep 24 12:47 PM

[jimmy46:]

median existing-home price for all housing types was $203,100 in August, down 9.5 percent from a year ago """"""""""

That's a worthless statistic because last year a mix of houses was sold,
this year mostly the cheap ones are selling.

You're comparing apples to oranges.

2008 Sep 24 01:08 PM

[RoyOrlando:]

Borrowing has to be taken back to where it was in the late 1930's. A person may borrow 2.5 times their annual salary for a home with 20% down. The median wage (2007) is $50,233.00 (wikipedia) therefore the median house price should be 125,582.50 just slightly below the 203,100 listed in the article. Unfortunately, the dose of reality that faces the U.S. is when there is overshoot there will also be undershoot. In theory, the highest median house price was 262,600 in March of 2007 (investmenttools.com) This means that houses overshot the median by 137,015.50, therefore, the median average may undershoot the median by 1/2 the overshoot. This leaves house prices somewhere around the 57,000 range (lower if the median wage drops over time).

2008 Sep 24 03:47 PM