by Risk calculated on 28/09/2022 16:17:00
Two key points:
1) There is a clear seasonal pattern for house prices.
2) The spike in distressed sales during the housing crisis has distorted the seasonal trend.
For a detailed description of these problems, see the article by Jed Kolko from 2014 “Let’s improve, don’t ignore, the seasonal adjustment of housing data”
Note: I was one of many people who questioned the seasonal factor change (here is a position in 2009) – and this led S&P Case-Shiller to also question the seasonal factor (since April 2010). I always use the seasonal factor (I think it’s better than using NSA data).
Click on the graphic to enlarge the image.
This chart shows the month-to-month change in the NSA’s national Case-Shiller index since 1987 (through July 2022). The seasonal pattern was smaller in the 90s and early 2000s and increased once the bubble burst.
Seasonal fluctuations have lessened after the crisis, but the recent price spike has changed the month-to-month trend.
The second chart shows the seasonal factors for the national Case-Shiller index since 1987. The factors started changing near the top of the bubble and really increased during the crisis as normal sales followed the regular seasonal pattern – and distressed sales have occurred throughout the year. .
Fluctuations in seasonal factors have diminished and seasonal factors have returned to more normal levels.