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Writer's pictureCharles "Skip" Geiser

Confused about what's happing with home prices?

Updated: Jun 13, 2023


edia coverage about what’s happening with home prices can be confusing. A large part of that is due to the type of data being used and what they’re choosing to draw attention to. For home prices, there are two different methods used to compare home prices over different time periods: year-over-year (Y-O-Y) and month-over-month (M-O-M). Here's an explanation of each.


Year-over-Year (Y-O-Y):

  • This comparison measures the change in home prices from the same month or quarter in the previous year.For example, if you're comparing Y-O-Y home prices for April 2023, you would compare them to the home prices for April 2022.

  • Y-O-Y comparisons focus on changes over a one-year period, providing a more comprehensive view of long-term trends. They are usually useful for evaluating annual growth rates and determining if the market is generally appreciating or depreciating.

Month-over-Month (M-O-M):
  • This comparison measures the change in home prices from one month to the next. For instance, if you're comparing M-O-M home prices for April 2023, you would compare them to the home prices for March 2023.

  • Meanwhile, M-O-M comparisons analyze changes within a single month, giving a more immediate snapshot of short-term movements and price fluctuations. They are often used to track immediate shifts in demand and supply, seasonal trends, or the impact of specific events on the housing market.


The key difference between Y-O-Y and M-O-M comparisons lies in the time frame being assessed. Both approaches have their own merits and serve different purposes depending on the specific analysis required.


Why Is This Distinction So Important Right Now?


We’re about to enter a few months when home prices could possibly be lower than they were the same month last year. April, May, and June of 2022 were three of the best months for home prices in the history of the American housing market. Those same months this year might not measure up. That means, the Y-O-Y comparison will probably show values are depreciating. The numbers for April seem to suggest that’s what we’ll see in the months ahead (see graph below):






That’ll generate troubling headlines that say home values are falling. That’ll be accurate on a Y-O-Y basis. And, those headlines will lead many consumers to believe that home values are currently cascading downward.

However, on a closer look at M-O-M home prices, we can see prices have actually been appreciating for the last several months. Those M-O-M numbers more accurately reflect what’s truly happening with home values: after several months of depreciation, it appears we’ve hit bottom and are bouncing back.


Here’s an example of M-O-M home price movements for the last 16 months from the CoreLogic Home Price Insightsreport (see graph below):





Why Does This Matter to You?


So, if you’re hearing negative headlines about home prices, remember they may not be painting the full picture. For the next few months, we’ll be comparing prices to last year’s record peak, and that may make the Y-O-Y comparison feel more negative. But, if we look at the more immediate, M-O-M trends, we can see home prices are actually on the way back up.

There’s an advantage to buying a home now. You’ll buy at a discount from last year’s price and before prices start to pick up even more momentum. It’s called “buying at the bottom,” and that’s a good thing.


Bottom Line


If you have questions about what’s happening with home prices, or if you’re ready to buy before prices climb higher, let’s connect.


 

What is the Market Doing?


 

Escambia County


Escambia

Month

Closed Sales

% Change Year Over Year

April 2023

​415

-20.5

March 2023

463

-18.1

Feb 2023

345

-22.6

Jan 2023

304

-28.0

Dec 2022

375

-31.7

Nov 2022

321

-31.1%

Oct 2022

438

-15.8%

​Sep 2022

459

-13.1

Aug 2022

518

-2.1%

Jul 2022

505

-9.8%

Jun 2022

592

-3.6%

May 2022

583

16.8%

Apr 2022

522

0.2%

Mar 2022

565

2.5%

Feb 2022

446

14.4%

Information from Florida Realtors

 

Santa Rosa County







Santa Rosa County

Month

Closed Sales

% Change Year Over Year

April 2023

331

-21.4

​March 2023

404

-12.2

Feb 2023

257

-35.8

Jan 2023

228

-27.2%

Dec 2022

330

-30.2%

Nov 2022

281

-31.3%

Oct 2022

331

-34.5%

Sep 2022

373

-20.1%

Aug 2022

427

-15.3%

Jul 2022

410

-20.1%

Jun 2022

492

-11.5%

May 2022

447

-4.1%

Apr 2022

421

-7.9%

Mar 2022

460

-0.4%

Feb 2022

400

9.6%

Information from Florida Realtors

 


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The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Skip Geiser LLC. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Skip Geiser LLC. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.


 

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