This morning, the S&P/Case-Shiller Home Price Indices showed that the not-seasonally adjusted December 10- and 20-City Composite declined 3.9% and 4.0% on a year-over-year basis, directly in line with Zillow’s forecast, which we released last week. On a seasonally adjusted monthly basis, both composites fell 0.5% from November to December. The table below shows how our forecast compared with the actual numbers.
“This month perfectly captures why 2012 is going to be a bit disorienting to most consumers paying attention to signals in the real estate market. Existing and pending home sales are up on a sequential basis in January, even while home prices for December are down substantially. It’s likely that a robust buying season in 2012 is emerging, fueled by low home values, low financing rates, and an improving economy, but with so many of these sales being foreclosures, we’re still going to see some modest declines in home values nationally for the full year,” said Zillow Chief Economist Dr. Stan Humphries. “While some reading the latest home price release could be forgiven for seeing the latest numbers as renewed weakness in the housing sector, the reality is that earlier calls of bottom were premature but the market is continuing to show signs of smaller annualized depreciation rates that we expect will continue across 2012.”
Our forecasting model incorporates previous data points of the Case-Shiller series, as well as Zillow Home Value Index data and national foreclosure resales. To see how Zillow’s forecast of the November Case-Shiller indices compared, see our blog post from last month.