The Case-Shiller U.S home price index released this week for November turned lower month over month. The November data is a composite average of September, October and November.
This data shows the sharp rise in interest rates, which began back in May, has had an impact on prices faster than many anticipated.
The impact is only beginning to occur in the construction sector with permits (blue line) and starts (green line) rolling over as interest rates have risen (red line inverted). The permits and starts, which are already sitting at depression like troughs, should continue to decline.
With home prices rising, interest rates rising and incomes stagnating or falling, home affordability has plunged over the last nine months. It will take incredible investor demand and market momentum euphoria to keep this most recent bump in prices artificially high.
For more see: 2014 Outlook: U.S. Home Prices