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Friday, September 21, 2012

Zillow forecasts Case-Shiller House Price index to show 1.6% Year-over-year increase for July

by Calculated Risk on 9/21/2012 02:22:00 PM

Note: The Case-Shiller report to be released next Tuesday is for July (really an average of prices in May, June and July).

Zillow Forecast: July Case-Shiller Composite-20 Expected to Show 1.6% Increase from One Year Ago

On Tuesday, Sept. 25, the Case-Shiller Composite Home Price Indices for July will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will be up by 1.6 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will be up 1.1 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from June to July will be 1 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 July Zillow Home Value Index data, and national foreclosure re-sales.

Case-Shiller July data confirms what we have been seeing for several months in other data points: The housing market has started its recovery, albeit appreciation is not back to “normal” pre-housing recession levels and most likely won’t be for the next few years. Zillow’s Home Value Index for August was released on Wednesday and shows a small decline in home values across the nation after nine consecutive months of appreciation. We expect Case-Shiller indices to moderate and likely report monthly declines toward the end of the year tracking the Zillow Home Value Index. Monthly depreciation toward the end of the year is largely 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.
Zillow's forecasts for Case-Shiller have been pretty close.

Case Shiller Composite 10Case Shiller Composite 20
Case Shiller
(year ago)
July 2011156.33154.12142.89141.12
(last month)
June 2012155.02154.38142.21141.31
Zillow June ForecastYoY1.1%1.1%1.6%1.6%
Zillow Forecasts1 158.0155.9145.2143.1
Current Post Bubble Low 146.52149.19134.10136.45
Date of Post Bubble Low Mar-12Jan-12Mar-12Jan-12
Above Post Bubble Low 7.8%4.5%8.3%4.8%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts