Today, S&P's Case-Shiller Home Prices Indices for December were released. If you adjust for seasonality, then home prices increased by 0.3% in December, according to its 20-city composite index. If you don't adjust for seasonality, then home prices declined by 0.2%. Prices fell by 3.1% year-over-year. While this news isn't exactly earth-shaking, it does show stability.
There's a disparity between seasonally adjusted and unadjusted data this month. Here's the adjusted data, which indicates a price increase for December:
And here's the same chart, unadjusted, showing a price decline:
So which is more accurate? Since home prices tend to decline in the winter months, the unadjusted decrease in prices is to be expected. Indeed, seasonality would dictate an even larger expected drop, which is why seasonal adjustment led to a gain.
While it's hard to know which is more accurate a measure of what really happened with home prices, I think it's more valuable to consider the trends. Both measures don't deviate much from zero at 0.3% and -0.2%. That indicates that there wasn't much change over the month, no matter which type of data you trust. The same can be said for the data over the past several months -- really since September. I interpret that as stability.
As always, the question is: where will the market go from here? If this apparent stability is real, then you should see home prices stop falling this year. But that doesn't necessarily mean we'll see them rising significantly going forward either. I haven't seen any data to suggest we'll have a steep recovery in housing. Given how bad the market has been over the past few years, even if 2010 merely establishes firm price stability, I think that's a great start on the road to recovery.