On Tuesday, Sept. 25, the Case-Shiller Composite Home Price Indices for July will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will be up by 1.6 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will be up 1.1 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from June to July will be 1 percent for both the 20-City Composite and the 10-City Composite Home Price Index (SA). 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 July Zillow Home Value Index data, and national foreclosure re-sales.
Case-Shiller July data confirms what we have been seeing for several months in other data points: The housing market has started its recovery, albeit appreciation is not back to “normal” pre-housing recession levels and most likely won’t be for the next few years. Zillow’s Home Value Index for August was released on Wednesday and shows a small decline in home values across the nation after nine consecutive months of appreciation. We expect Case-Shiller indices to moderate and likely report monthly declines toward the end of the year tracking the Zillow Home Value Index. Monthly depreciation toward the end of the year is largely a function of declining overall monthly sales volume which will increase the percentage of foreclosure re-sales in the transactional mix being tracked by Case-Shiller.
The chart below shows the Case-Shiller 20-City Composite Index (NSA) forecasted five years into the future. We’ve extended the 20-City Index with the Zillow forecast for year-over-year growth in the national Case-Shiller Home Price Index (since the 20-City and national indices track each other very closely). Our Case-Shiller National forecast is based on the September 2012 Zillow Home Price Expectations Survey, administered by Pulsenomics, which surveys over 100 professional forecasters quarterly to forecast the Case-Shiller National Home Price Index for the next five years. The survey results were just released on Thursday, Sept. 20, and show that forecasters are much more optimistic compared to prior surveys. See our results here. Zillow anticipates the Case-Shiller National Index to be up by 3 percent in December 2012 compared to December 2011.
Zillow’s August 2012 data can be found here. The Zillow Home Value Index does not include foreclosure re-sales, and we expect it to increase 1.1 percent between June 2012 and June 2013.