Zillow Forecast: May Case-Shiller Composite-20 Expected to Show 1% Decline from One Year Ago

Posted by: Stan Humphries    Tags:      Posted date:  July 27, 2012  

On Tuesday, July 31st, the Case-Shiller Composite Home Price Indices for May will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will decline by 1 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will decline by 1.3 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from April to May will be 0.8 percent for the 20-City Composite and 0.9 percent for 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 May Zillow Home Value Index data, and national foreclosure re-sales.

May is the fourth consecutive month with monthly appreciation for the Case-Shiller indices, with May projected to be a bit stronger than the previous two months. Zillow has called a home value bottom for the national real estate market with many regional markets experiencing inventory shortages and strong near-term price appreciation. This is combined with a decreasing level of foreclosure re-sales, partly due to a thinning foreclosure pipeline and partly due to the summer sales season, impacting the Case-Shiller indices positively this month.

Over the next year, June 2012 to June 2013, Zillow forecasts national home values to increase by 1.1 percent, however there is fair amount of variability at the metro level, with Phoenix showing strong appreciation of close to 10 percent, while St. Louis is still forecasted to depreciate by 2.6 percent and not reaching a bottom within the next year. The chart below shows the Case-Shiller 20-City Composite Index (NSA) forecasted 5 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 June 2012 Zillow Home Price Expectations Survey, administered by Pulsenomics, which surveys over 100 economists quarterly to forecast the Case-Shiller National Home Price Index for the next five years . Zillow anticipates the Case-Shiller National Index to be down by 1.2 percent in December of 2012 compared to December of 2011.

Note, Zillow’s June 2012 data was released this week, Tuesday, July 24th.

About the author
Stan Humphries
Stan is Zillow's Chief Economist. To learn more about Stan, click here