Price declines accelerating

The latest evidence suggests that prices have started to fall at a faster pace once again. After having dropped by 1.0% m/m in both December and January, prices on the seasonally adjusted FHFA index fell by 1.6% m/m in February. Admittedly, the Case-Shiller index has bucked this trend. But that's because it tends to lag the other indices. Indeed, the larger falls on the CoreLogic index suggest that the Case-Shiller index will soon drop at a faster rate. The sharper falls in prices appear to be due to an increase in the number of distressed sales. With many more homes in the foreclosure pipeline, prices will continue to fall throughout this year and perhaps into next year too.