Friday, August 24, 2012

Zillow forecasts Case-Shiller House Price index to show small Year-over-year increase for June

by Bill McBride on 8/24/2012 08:22:00 PM

Note: The Case-Shiller report is for June (really an average of prices in April, May and June).

Zillow Forecast: Zillow Forecast: June Case-Shiller Composite-20 Expected to Show 0.3% Increase from One Year Ago

On Tuesday, August 28th, the Case-Shiller Composite Home Price Indices for June will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will be up by 0.3 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will be flat on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from May to June will be 0.9 percent for both the 20-City Composite and the 10-City Composite Home Price Index (SA). All forecasts are shown in the table below and are based on a model incorporating the previous data points of the Case-Shiller series and the June Zillow Home Value Index data, and national foreclosure re-sales.

This will be the first month with positive annual appreciation in the 20-City Index since September of 2010. In 2010, home prices showed increases due to the Federal home buyer credit, which artificially lifted the market. This time around the home price appreciation is organic and represents a recovering housing market. Zillow has called a home value bottom for the national real estate market with many regional markets experiencing inventory shortages and strong near-term price appreciation. While the Case-Shiller indices have been appreciating at a healthy clip for the past few months, we do expect them to moderate and likely report monthly declines towards the end of the year, largely as a function of declining overall monthly sales volume which will increase the percentage of foreclosure re-sales in the transactional mix being tracked by Case-Shiller.

For those of you interested in more recent data on the housing market, Zillow’s July 2012 data was released this week, Tuesday, August 21st and can be found here. The Zillow Home Value Index does not include foreclosure re-sales, and we expect it to increase 1.2% between June 2012 and June 2013.
Zillow's forecasts for Case-Shiller have been pretty close.

If the Zillow forecast is correct, this will be a significant milestone for the Case-Shiller as year-over-year prices turn positive.

Case Shiller Composite 10Case Shiller Composite 20
NSASANSASA
Case Shiller
(year ago)
June 2011154.87154.35141.50140.78
Case-Shiller
(last month)
May 2012151.79152.88138.96139.93
Zillow June ForecastYoY0.0%0.0%0.3%0.3%
MoM2.1%0.9%2.2%0.9%
Zillow Forecasts1 154.9154.3142.0141.2
Current Post Bubble Low 146.51149.21134.08136.49
Date of Post Bubble Low Mar-12Jan-12Mar-12Jan-12
Above Post Bubble Low 5.7%3.4%5.9%3.4%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts

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