Radio Rallies & Reversals

The latest Case-Shiller home price data, for the month of September, is a three-month moving average of homes sold in July, August, and September. The data shows a monthly decline across all markets, with the single exception of the Washington metropolitan area. The 20-city index was off 0.7% in September, after falling just 0.2% the prior month. Fully 15 of the measured markets are down over the past year.

The latest Case-Shiller release also included quarterly data on the national home price index. From the second quarter to the third, home prices nationally were off 3.4%. And as of the third quarter, home prices are down 1.5% from the previous year.

Falling home prices are nice for those looking to buy new homes. But falling prices also exacerbate ongoing crises, including the economy's flirtation with deflation and the problem of rampant negative equity. As values fall, ever more homeowners find themselves owing so much more on their homes than they're worth that default becomes the most attractive option—which leads to rising bank-owned supply and more downward pressure on prices.

What's the upside? Expect more policies favorable to a lower US$, higher stock prices, and higher commodity prices.

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