The July S&P/Case-Shiller (SPCS) data out this morning indicated continued slowing in the housing market with the annual change in the 20-city index falling to 6.7 percent from 8.1 percent the prior month. Our current forecast for SPCS next month indicates further slowing with the annual increase in the 20-City Composite Home Price Index falling to 5.7 percent in August.

The non-seasonally adjusted (NSA) monthly increase in July for the 20-City index was 0.6 percent, and we expect it to fall to 0.3 percent next month.

All forecasts are shown in the table below. These forecasts are based on the July SPCS data release this morning and the August 2014 Zillow Home Value Index (ZHVI), released September 18. Officially, the SPCS Composite Home Price Indices for August will not be released until Tuesday, October 28.

This month’s (July) SPCS release continued the sharp slowdown in month-over-month appreciation seen since February/March of this year (see Figure 1). This month both the 10-City and 20-City Composites (SA) were down 0.5 percent month-over-month versus -0.2 percent and -0.3 percent last month, respectively. As noted, we expect this slowdown to continue in next month’s release.

Interestingly, in Figure 1, we can see that the national index is actually diverging from the two composite indices, perhaps a sign of more rapid slowdown in the large coastal metros, which are more dominant in the composite indices relative to the rest of the country where affordability is still very high.

In the Zillow Home Value Index, we expect positive but slowing home value appreciation over the next twelve months. In the ZHVI, home values for August are up 6.6 percent from a year earlier but we expect national home values to rise only 3.1 percent between August 2014 and August 2015. Further details on our forecast of home values can be found here, and more on Zillow’s full August 2014 report can be found here.

More on the differences between SPCS and ZHVI can be found here. Our commentary on the revisions to the national S&P/Case-Shiller Index can be found here.