Jan. Case-Shiller: A Healthy Return to Fundamentals

Today, the S&P/Case-Shiller Home Price Indices showed that the non-seasonally adjusted (NSA) January 10- and 20-City Composites rose 4.4 and 4.6 percent, respectively, on a year-over-year basis. The U.S. National Index rose 4.5 percent year-over-year. Today’s data were in line with Zillow’s forecasts, released last month.

On a seasonally adjusted (SA) monthly basis, the 10- and 20-City Composites were each up 0.9 percent from December to January. The National Index rose 0.6 percent month-over-month (SA). The table below shows how Zillow’s forecast compared with the actual numbers.

n“The slower pace of home value appreciation we’ve been seeing for the past few months is further proof of a market in transition, getting healthier as it returns to growth driven by fundamentals like more jobs, higher incomes and improving household formation,” said Zillow Chief Economist Dr. Stan Humphries. “This slower appreciation allows buyers and sellers alike to catch their breath, at the same time as confidence among renters grows. Roughly 5 million current renters have expressed a desire to buy this year, up from 4 million last year. As more renters transition into homeownership, rental demand will ease, helping to cool rapid rental appreciation while also helping create more rental vacancies that can be soaked up as more young households form.”

Our forecasting model incorporates previous data points of the Case-Shiller series, as well as Zillow Home Value Index data and national foreclosure resales. To see how Zillow’s forecast of the December Case-Shiller indices compared, see our research brief from last month.