Today, the S&P/Case-Shiller Home Price Indices showed that the non-seasonally adjusted (NSA) May 10- and 20-City Composites rose 11.8 percent and 12.2 percent on a year-over-year basis, in line with Zillow’s forecast released last month. On a seasonally adjusted (SA) monthly basis, the 10- and 20-City Composites rose 1.1 percent and 1.0 percent from April to May. The table below shows how our forecast compared with the actual numbers.

“Case-Shiller put up some big numbers in June, but more current data shows the pace of monthly home value appreciation slowed in both June and July, likely as a result of mortgage rate increases. We expect even the Case-Shiller index will begin to show this trend when its July data finally comes out in September, but it will be more muted since the index is looking at a three-month average,” said Zillow Chief Economist Dr. Stan Humphries. “In reality, when looking at a larger footprint of homes and non-distressed sales, home values are currently rising about 6 percent per year, which leaves ample headroom to accommodate the moderating influence introduced by climbing mortgage rates. Over the next year, home value appreciation rates will slow as investors exit the market, mortgage interest rates rise, negative equity falls, builders ramp up and more homes come on the market. This ongoing stabilization is not reflected in the lagging Case-Shiller index, but it is happening, and it’s not the end of the world for the housing market.”

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 our prediction for next month’s Case-Shiller indices, please click here. To see how Zillow’s forecast of the April Case-Shiller indices compared, see our blog post from last month.