The December S&P/Case-Shiller (SPCS) data released this week showed healthy home price appreciation largely at pace with prior months, with annual growth in the U.S. National Index at 4.6 percent in December.

Annual appreciation in home values as measured by SPCS has been less than 5 percent for the past four months. We anticipate this trend to continue as annual growth in home prices slows to more normal levels between 3 percent and 5 percent. Zillow predicts the U.S. National Index to rise 4.5 percent on an annual basis in January.

The 10- and 20-City Composite Indices both experienced modest bumps in annual growth rates in December; the 10-City index rose to 4.3 percent and the 20-City Index rose to 4.5 percent – up from rates of 4.2 percent and 4.3 percent, respectively, in November. The non-seasonally adjusted (NSA) 10- and 20-City indices both rose 0.1 percent from November to December. We expect both to turn negative in January, with each predicted to fall 0.1 percent month-over-month (NSA).

All forecasts are shown in the table below. These forecasts are based on the December SPCS data release and the January 2015 Zillow Home Value Index (ZHVI), released Feb. 19. Officially, the SPCS Composite Home Price Indices for January will not be released until Tuesday, March 31.

This month’s (December) SPCS release shows modest monthly gains for the non-seasonally adjusted composite series, and a small decline for the national series. On a seasonally adjusted basis, all three series showed more robust monthly gains. The Zillow Home Value Index was up 5.4 percent year-over-year in January. Zillow data shows the annual home value appreciation rate has fallen every month since April, and we expect this slowdown to continue throughout 2015. The January Zillow Home Value Forecast calls for a 2 percent rise in home values through January 2016, less than half the current rate of appreciation. Further details on our forecast of home values can be found here, and more on Zillow’s full January 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.