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Friday, October 26, 2012

Zillow forecasts Case-Shiller House Price index to show 1.7% Year-over-year increase for August

by Calculated Risk on 10/26/2012 03:32:00 PM

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

Zillow Forecast: August Case-Shiller Composite-20 Expected to Show 1.7% Increase from One Year Ago

On Tuesday Oct. 30, the Case-Shiller Composite Home Price Indices for August will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will be up by 1.7 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will be up 1.2 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from July to August will be 0.2 percent for the 20-City Composite and 0.3 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 August Zillow Home Value Index data and national foreclosure re-sales.

As the housing market recovery continues, home prices are expected to modestly appreciate, with growth rates being below “normal” pre-housing recession levels. Zillow’s Home Value Index for September was released on Monday night and shows the largest quarterly appreciation since March 2006, showing that the market is regaining some of its strength. National home values are up 3.2 percent from year-ago levels and have now seen four consecutive quarters of appreciation. While the national housing market is showing consistent signs of improvement, the recovery is uneven across the country. Some markets, such as Phoenix, Riverside and Miami are doing exceptionally well, while St. Louis and Atlanta are still faltering. Part of the strong home value appreciation we are seeing is driven by acute inventory shortages in many markets with foreclosures and foreclosure re-sales down and many people still locked up in negative equity, limiting overall supply. In these last months of 2012, Case-Shiller indices are expected 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)
August 2011156.51153.49142.97140.11
(last month)
July 2012157.3154.85144.61142.1
Zillow June ForecastYoY1.2%1.2%1.7%1.7%
Zillow Forecasts1158.4155.3145.4142.4
Current Post Bubble Low146.52149.19134.10136.45
Date of Post Bubble LowMar-12Jan-12Mar-12Jan-12
Above Post Bubble Low8.1%4.1%8.4%4.4%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts