The Case-Shiller data for February came out this morning and, based on this information and the March 2013 Zillow Home Value Index (released last week), we predict that next month’s Case-Shiller data (March 2013) will show that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) increased 9.8 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) increased 9.3 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from February to March will be 0.9 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 March will not be released until Tuesday, May 28.
The Case-Shiller numbers for February came in stronger than we predicted. While we do expect March home price appreciation to remain strong, we do believe this rate of home price appreciation is not sustainable in the long run. The March data for the Zillow Home Value Index already showed first signs of a slowdown in appreciation with some metros experiencing depreciation or very low appreciation. Going forward, many economists expect annual appreciation for the next 5 years to be somewhat muted, as the Zillow Home Price Expectations Survey shows. This survey of over 100 economists predicts the Zillow Home Value Index (ZHVI) 5 years into the future. While this forecast focuses on the ZHVI instead of the Case-Shiller Home Price Indices, it is useful to evaluate the overall trend. The Case-Shiller Index will tend to be more volatile, as it also includes foreclosure re-sales.
To forecast the Case-Shiller indices we use past data from Case-Shiller, as well as the Zillow Home Value Index (ZHVI), which is available more than a month in advance of Case-Shiller numbers, paired with foreclosure resale numbers, which we also have available more than a month prior to Case-Shiller numbers. Together, these data points enable us to reliably forecast the Case-Shiller 10-City and 20-City Composite indices. The ZHVI does not include foreclosure resales and shows home values for March 2013 up 5.1 percent from year-ago levels. We expect home value appreciation to continue to moderate in 2013, rising only 3.2 percent from March 2013 to March 2014. Further details on our forecast can be found here and more on Zillow’s full March 2013 report can be found here. The next Zillow Home Price Expectations Survey will be released the week of May 6.