December Home Prices

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The size-adjusted median resale home price dropped precipitously last month. Prices as measured by this indicator dropped 4.6 percent for single family homes and 5.8 percent for condos -- 5.0 percent in aggregate -- and that was just since November. Since the series peak in September of 2005, the size-adjusted median price has now dropped 19.7 percent for single family homes, 23.1 percent for condos, and 20.9 percent in aggregate.

The size-adjusted median price accounts for each home's square footage, providing a more accurate idea of price changes by accounting for what size home buyers have been getting for their money. Nonetheless, the unadjusted median sale price is the metric that is discussed most in the media.

That should make for an interesting series of reports this month, as the plain vanilla median price fared even worse than the size-adjusted median. The condo median was down 4.6 percent between November and December, while the single family home median was down a whopping 6.6 percent, making for an aggregate decline 6.4 percent for the month.

As with any single month's data point, this could be an abberation, although the prior month's steep drop suggests that at least some of this latest decline in the size-adjusted median is the real deal. Over the next few months we will get a better idea of how much of this drop is random noise, how much is due to year-end foreclosure "clearance sales" by lenders, and how much of it represents a true acceleration of the trend towards lower home prices.

-- RICH TOSCANO