Home prices fell sharply again in August according to the two leading home price indices, both released this morning. The Federal Housing Finance Agency (FHFA) logged a month-over-month decline of 0.7%–a modest acceleration from the 0.6% decline seen in July. The S&P Case Shiller 20 city index fell 1.3% in today’s report compared to a 0.7% drop last month. Does this mean prices are falling? Technically, yes. Using FHFA as an example, it means that a home that sold for $397k in June would have sold for roughly $392k in August. Moreover, the shift from gains to losses has been incredibly abrupt. The following chart shows the different in the monthly price movement from the same period last year. As abrupt as the shift has been in terms of the monthly trajectory, home prices are typically tracked in terms of outright year-over-year changes. While it’s true that year-over-year gains are lower than they were a few months ago, they’re still strongly positive. In fact, the home that sold for $392k in August of this year would have sold for roughly $350k in August of last year, a difference of 12%, year over year. As the chart above suggests, 12% year over year is very high–higher even than the run up to the mortgage meltdown in 2007-2009. That said, the 12% number is likely to continue lower in the coming months. That will be true even if prices don’t go any lower simply because subsequent months will be compared to higher and higher prices in the past.