This morning, the S&P/Case-Shiller Home Price Indices showed that the non-seasonally adjusted January 10- and 20-City Composite declined 3.9% and 3.8% on a year-over-year basis. On a seasonally adjusted monthly basis, the 10-City Composite fell 0.1% while the 20-City remained unchanged from December to January, directly in line with Zillow’s forecast, which we released last week. The table below shows how our forecast compared with the actual numbers.
“Consistent with Zillow’s forecast, the Case-Shiller index essentially treaded water between December and January on a seasonally adjusted basis and the year-over-year comparison modestly improved. It’s going to be tempting to look at home price declines and see a still-faltering housing recovery, but that’s just not the case,” said Zillow Chief Economist Dr. Stan Humphries. “The reality is that home prices and home sales will be moving in opposite directions throughout much of 2012. Increasing sales volume even in the midst of fall home values is not inconsistent with a recovery. Unfortunately, with 1 in 5 sold homes being foreclosure re-sales, even with higher sales, there will be some downward pressure on prices. That’s not bad news, it’s a sign that the market is healing itself. The only bad news will be if the pace of sales doesn’t increase in 2012, but we don’t currently foresee that happening.”
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 December Case-Shiller indices compared, see our blog post from last month.