Median vs Repeat Sales Index House Prices

Back in October, I wrote The Coming Deceleration in House Price Growth. In that post, I noted that the median prices (as reported by the National Association of Realtors® (NAR) was showing a slowdown in year-over-year (YoY) house price growth.

The median prices reported by the NAR are for the most recent month only, so the prices are very timely. However, the prices can be distorted by the mix of homes sold. (Here is my post on the January NAR report).

Case-Shiller is a repeat sales index (they compare the current price of home to the previous sales price), and it a three-month average. So, the most recent report (for December), was actually for homes sold in October, November and November. The key point is: Not only is Case-Shiller released with a lag, but it is a 3-month average.

This graph - that I posted in October - showed that Case-Shiller followed the median prices up, and then the YoY growth in median prices started falling - and I expected Case-Shiller to follow.

Here is the same graph through the most recent reports.

Sure enough, the YoY growth in the Case-Shiller started to decelerate.

However, median prices have picked up over the last three months - so there isn’t evidence of a sharp decline in the YOY growth.

If there is a slowdown in house price growth, we should expect to see it in median prices first.