The release today by Nationwide of figures showing house prices dropped by 2.5% in May will come like a kick in the teeth to house builders and estate agents.
It is the last thing they want to hear given the fragility of the market. A drop of two grand or so in the average price of a house in a month is a lot to swallow and will put of plenty of would be buyers.
But the big question that the figure raises is whether or not the UK is heading for a US style housing collapse, where since the summer of 2006 prices have fallen by about 17% and they are still on the way down.
It is worth reading what the National Association of Realtors was saying in April 2006. The words worth noting are: "This is additional evidence that we're experiencing a soft landing. We may see some minor slowing in home sales as interest rates rise, but the market clearly is stabilizing."
All a bit familiar, except we have had the added comfort of "strong economy", "highest ever levels of employment", "not so much irresponsible lending" to ease our worries.
We have heard less of the fact that we have experienced a significantly more heated house price inflation that most other countries.
To satisfy some curiosity I have rather hastily put together a few graphs that compare the UK experience of home sales and prices with that in the US. US v UK HPI (just right click and save target if you want to download the numbers).
These graphs take numbers from S&P Case Shiller and National Association of Realtors in the US and from the Revenue and Nationwide in the UK. They are a bit crude and not totally comparable but they'll do to illustrate some points.
Home sales dipped in the States in mid to late 2005, here they started to fall a year later.
Prices in the States started to fall about a year after sales fell, a similar pattern occured here.
The graph of monthly price changes interestingly shows what looks like a "dead cat bounce" in sentiment in late 2006 early 2007, when the optimistic may have felt a corner had been turned. We appear to have just experience one. This phenomenon of a faux recovery is well know to City types.
The next few months should prove interesting. Certainly the house builders have seen the market "fall off a cliff" over the past few months in a style similar to that in the US - what of prices?