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Tuesday, September 24, 2013

Zillow: Case-Shiller House Price Index expected to show 12.4% year-over-year increase in August

by Calculated Risk on 9/24/2013 08:56:00 PM

• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, the Durable Goods Orders report for August will be released by the Census Bureau. The consensus is for a 0.5% decline in durable goods orders.

• At 10:00 AM, New Home Sales for August from the Census Bureau. The consensus is for an increase in sales to 425 thousand Seasonally Adjusted Annual Rate (SAAR) in August from 394 thousand in July. Based on the various reports, sales were probably weak again in August.

• At 12:00 PM, the Federal Reserve will release the Q2 Flow of Funds Accounts of the United States.

The Case-Shiller house price indexes for July were released yesterday. Zillow has started forecasting Case-Shiller a month early - and I like to check the Zillow forecasts since they have been pretty close. 

From Zillow: August Case Shiller Indices Expected to Show Further Monthly Slowdowns

The Case-Shiller data for July came out this morning and, based on this information and the August 2013 Zillow Home Value Index (released yesterday), we predict that next month’s Case-Shiller data (August 2013) will show that both the non-seasonally adjusted (NSA) 20-City Composite Home Price Index and the NSA 10-City Composite Home Price Index increased 12.4 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from July to August will be 0.6 percent for both the 20-City Composite and the 10-City Composite Home Price Indices (SA). All forecasts are shown in the table below. Officially, the Case-Shiller Composite Home Price Indices for August will not be released until Tuesday, October 29.
Both the Case-Shiller indices and the Zillow Home Value index are showing the first signs of moderation in home value appreciation. We are seeing slowing in month-over-month appreciation, although the Case-Shiller indices will continue to show an inflated picture of home prices. The Case-Shiller indices are biased toward the large, coastal metros currently seeing enormous home value gains, and they include foreclosure resales. The inclusion of foreclosure resales disproportionately boosts the index when these properties sell again for much higher prices — not just because of market improvements, but also because the sales are no longer distressed.
To forecast the Case-Shiller indices, we use the July Case-Shiller index level, as well as the August Zillow Home Value Index (ZHVI), which is available more than a month in advance of the Case-Shiller index, paired with July foreclosure resale numbers, which Zillow also publishes more than a month prior to the release of the Case-Shiller index. Together, these data points enable us to reliably forecast the Case-Shiller 10-City and 20-City Composite indices.
The following table shows the Zillow forecast for the August Case-Shiller index.

Zillow August Forecast for Case-Shiller Index
 Case Shiller Composite 10Case Shiller Composite 20
Case Shiller
(year ago)
August 2012158.51154.97145.81142.44
(last month)
July 2013176.52173.19162.49159.18
Zillow ForecastYoY12.4%12.4%12.4%12.4%
Zillow Forecasts1 178.1174.2163.8160.1
Current Post Bubble Low 146.46149.63134.07136.87
Date of Post Bubble Low Mar-12Jan-12Mar-12Jan-12
Above Post Bubble Low 21.6%16.4%22.2%17.0%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts