House price indices fall, unchanged in October;  further evidence of real declines since the summer

– by a New Deal Democrat

The Case Shiller National Home Price Index fell another -0.3% in November and is now up 9.2% y/y compared to a peak of +20.8% y/y in March (note , which is consistent with my rule of thumb that a decline of 1/2 or more in year-over-year growth over the past 12 months indicates that the streak has peaked and flipped over).

The purchase-only FHFA home price index was flat for the month and up 9.7% year-over-year (from its peak of +19.7% in February, so it’s also down by my rule of thumb):

Here’s an update of the FHFA home price index on an annualized basis (/2 for scale) versus owner-equivalent rent in the CPI:

Since OER follows house prices with a roughly 12-month lag, I expect OER to continue to increase year-over-year for several more months before falling sharply, possibly early next spring. Also note that the most recent FHFA and Case Shiller report is for October, so the year-over-year change for that month is probably closer to about 6%.

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