Wednesday, December 19, 2012

Zillow forecasts Case-Shiller House Price index to increase 4.1% Year-over-year for October

by Bill McBride on 12/19/2012 12:15:00 PM

Zillow Forecast: October Case-Shiller Composite-20 Expected to Show 4.1% Increase from One Year Ago

On Wednesday December 26th, the Case-Shiller Composite Home Price Indices for October will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will be up by 4.1 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will be up 3.1 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from September to October will be 0.3 percent for the 20-City Composite and 0.1 percent for 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, the October Zillow Home Value Index data and national foreclosure re-sales.

As we had previously discussed, monthly appreciation has slowed and will eventually turn negative in the last months of 2012. This slowdown is in large part due to Case-Shiller’s mix of distressed and non-distressed properties in the same index, as they include foreclosure re-sales. As the market slows down a bit and fewer homes are listed, foreclosure re-sales will make up a larger part of the transactional mix and will therefore skew the Case-Shiller Indices to be more negative. Despite this slowdown, home values are still higher this year than they were at this same time last year.
Zillow's forecasts for Case-Shiller have been pretty close.  Right now it looks like Case-Shiller will be up close to 6% for 2013 (through the December / Q4 reports to be released next year).

Case Shiller Composite 10Case Shiller Composite 20
Case Shiller
(year ago)
Oct 2011153.54151.55140.05138.21
(last month)
Sept 2012158.93155.63146.22143.15
Zillow Oct ForecastYoY3.1%3.1%4.1%4.1%
Zillow Forecasts1158.3156.0145.8143.7
Current Post Bubble Low146.46149.39134.07136.66
Date of Post Bubble LowMar-12Jan-12Mar-12Jan-12
Above Post Bubble Low8.1%4.4%8.7%5.2%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts

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