Articles About Housing Prices

About once a month, we are bombarded by financial articles about how the latest data shows that housing prices have dropped yet again. Here's an example on Bloomberg:

"The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. "

I'm annoyed by these articles, and I'll tell you why. I get that the year-over-year change in housing prices is a good metric. I get it. I'm in no way suggesting that they should stop using that metric.

However, they should pair this data with the change between this month and last month. Almost no articles do this. For instance, take the following hypothetical example:


In this hypothetical example, home prices increased between Aug 2007 and Sept 2007. However, average home prices largely stayed the same between Aug 2008 and Sept 2008. The result would be that the year-over-year change would look a lot worse in Sept 2008, compared with Aug 2008 -- except that home prices largely stayed the same between those two months. That is the type of information you lose when you only report year-over-year change and don't pair it with the difference between this month and last month.