Zillow Forecast: December Case-Shiller Composite-20 Expected to Show 4.0% Decline from One Year Ago

The Case-Shiller Composite Home Price Indices for December will be released on Tuesday, Feb. 28. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will decline by 4.0 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will decline by 3.9 percent. The seasonally adjusted (SA) month-over-month change from November to December will be -0.5 percent and -0.6 percent for the 20 and 10-City Composite Home Price Index (SA), respectively. All forecasts are shown in the table below and are based on a model incorporating the previous data points of the Case-Shiller series and the December Zillow Home Value Index data, and national foreclosure resales.

As we mentioned last time, the Case-Shiller indices are experiencing the bulk of 2011 home price depreciation in the last quarter of the year contrary to the trend displayed by the Zillow Home Value Index (ZHVI), where the pace of depreciation has slowed since the start of this year with only December showing a significant pick-up in the depreciation rate. The December Zillow Real Estate Market Reports, released on Thursday, Feb. 9, showed monthly home value depreciation increasing to -0.6%  from November to December, representing a 4.7 percent decline on a year-over-year basis. While home values are expected to fall further in 2012 with a definitive bottom probably a year away, home sales are expected to pick up pace in 2012 stabilizing home prices across the nation.

Our monthly Case-Shiller forecast is in line with the Zillow Home Price Expectations Survey administered by Pulsenomics, which surveys over 100 economists quarterly to forecast the Case-Shiller National (NSA) Home Price Index (HPI) for the next five years. The latest median expectation across all economists was for the Case-Shiller National HPI to fall by 1.97% between Q4 2010 and Q4 2011, whereas Zillow expected the index to fall by 3.5% over the period. This most recent monthly forecast completes 2011 and it seems likely that the year will close out with more price depreciation than even we had anticipated. The chart below shows the Case-Shiller 20-City Composite HPI (NSA). To give some idea of future projections, we’ve extended the 20-City HPI with the Zillow forecast for year-over-year growth in the national Case-Shiller HPI (since the 20-City and national HPIs track each other very closely).