[An earlier version of this article appeared on Forbes.com.]

The report last month of a 13% fall in the number of new homes sold in September (compared to the previous September) was another bit of bad news behind the 10% fall in the S&P 500 at one point in October. Homebuilder stocks were down nearly 40% from last January.

Looking at the graph below of Federal Reserve Economic Data (FRED), you can see new home sales have a strong tendency to fall a year or two before recessions begin, which helps explain why so many people are interested in following new home sales.

FRED New Home Sales Annotated v2.png

The number of new homes sold began to fall a year or two before six out of the last seven recessions. (Home sales did not fall before the 2001 recession.) Looking at the graph again, you can see that new home sales did fall a few times without being followed by recessions—once in the 1960s, once in the 1980s and twice in the 1990s.

Case-Shiller Home Price Index

Now let’s switch from the new home market to the much larger existing home market and existing home price trends.

One of the most closely followed statistics on the strength of the existing home market is the Case-Shiller Home Price Index. The Case-Shiller numbers are not the most current, they run about two months behind. But despite being slow, their “repeat sale” index is considered by many to be a better measure of home prices than median or average home prices. Average and median home prices, for example, are affected by the composition of the homes sold. If more luxury homes sell because the stock market is hot, that would increase the median and average home prices in a city even if home prices haven’t actually changed at all.

The latest Case-Shiller numbers show that home prices were still increasing in all 20 cities covered by the index and in the U.S. as a whole, but price increases were getting smaller.

Hot: Las Vegas home prices (up 13.9% in August compared to the previous August), San Francisco (up 10.6%) and Seattle (9.6%) had the highest annual home price appreciation in the 20 cities covered by Case-Shiller.

Cold: New York (up 2.8%) tied Washington D.C. (up 2.8%) for the least home price appreciation in the 20 cities. New York knocked Chicago (up 2.9%) out of the second worst spot.

Case-Shiller Hottest and Coldest

Home Price Momentum

Las Vegas and San Francisco had by far the largest increases in home price momentum comparing their price increases the last 12 month to the previous 12 months.

Seattle’s price momentum slowed the most, down 3.6%, but Seattle still had a very high 9.6% appreciation rate over the last 12 months. Seattle led the country in home price appreciation from July 2016 through May 2018.

San Diego and Dallas were losing some upward momentum on prices but their home prices were still increasing at over 4% a year.

Overall, the U.S. home price momentum is essentially flat. U.S. home prices increased 5.8% in the last 12 months and 5.9% the previous 12 months. Half the 20 cities covered by Case-Shiller saw increasing price momentum and half saw decreasing home price momentum.

Case-Shiller Price Momentum Chart.png

The Case-Shiller existing home price index doesn’t show any red flags (yet) but, on the other hand, they say price is the last thing to change.

For more, here’s my discussion from last month on price deceleration and plateauing.

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