Zillow Forecast: January Case-Shiller Composite-20 Expected to Show 3.7% Decline from One Year Ago

On Tuesday, March 27th, the Case-Shiller Composite Home Price Indices for January will be released. Zillow predicts that both the 20-City and the 10-City Composite Home Price Indices (non-seasonally adjusted [NSA]) will decline by 3.7 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from December to January will be zero percent and -0.1 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 re-sales.

Last year closed on a somewhat surprising note, with higher than expected depreciation. While we had correctly forecasted the 4 percent year over year decline in December – 2 weeks before the numbers became public – the Zillow Home Price Expectations survey showed that the consensus among more than 100 economists in December 2011 was for the decline to be 1.97 percent on a year over year basis. The January Zillow Real Estate Market Reports, released on Tuesday, March 13th, showed monthly home value depreciation at -0.5 percent from December to January, representing a 4.6 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.

The March 2012 Zillow Home Price Expectations Survey, administered by Pulsenomics, which surveys over 100 economists quarterly to forecast the Case-Shiller National Home Price Index (HPI) for the next five years was just released this week. The much higher than consensus depreciation rates in the last quarter of 2011 will likely impact the consensus forecast going forward. Zillow anticipates the Case-Shiller National Index to fall another 1.5 percent in 2012. 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).