Wednesday, January 29, 2020

Zillow Case-Shiller Forecast: House Price Gains "Primed for an Upswing"

by Calculated Risk on 1/29/2020 04:40:00 PM

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

From Matthew Speakman at Zillow: November Case-Shiller Results and December Forecast: Primed for an Upswing

The S&P CoreLogic Case-Shiller U.S. National Home Price Index® rose 3.5% year-over-year in November (non-seasonally adjusted), up from 3.2% in October. Annual growth was also up from September in the smaller 10-city index (to 2%, from 1.7%) and in the 20-city index (to 2.6%, from 2.2%).
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After a yearlong slowdown in 2019, home values appear primed to go back on the upswing to start 2020.

The main driver in this acceleration is clearly the ongoing and historic lack of for-sale inventory, though a strong job market, stabilizing geopolitical tensions and still-low mortgage rates have played their part. Even taking seasonal factors into consideration, the number of homes available for sale fell consistently through the latter part of 2019 and now sits near the lowest level on record. This lack of homes has made competition among buyers — buoyed by otherwise favorable economic conditions — even more fierce, in turn helping to push up prices even faster. Indeed, homebuying activity has picked up in recent months, with sales of existing homes reaching their highest level in nearly two years in December.
emphasis added
Zillow forecast for Case-Shiller The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be at 4.1% in December, up from 3.5% in December.

The Zillow forecast is for the 20-City index to be up 3.2% YoY in December from 2.6% in November, and for the 10-City index to increase to 2.7% YoY compared to 2.0% YoY in November.