As Predicted, July Case-Shiller Continues to Moderate

Today, the S&P/Case-Shiller Home Price Indices showed that the non-seasonally adjusted (NSA) July 10- and 20-City Composites each rose 6.7 percent on a year-over-year basis, in line with Zillow’s forecast released last month. On a seasonally adjusted (SA) monthly basis, the 10- and 20-City Composites fell -0.5 percent, respectively, from June to July. The table below shows how Zillow’s forecast compared with the actual numbers.

“The housing market has been giving us a lot of mixed signals lately. New home sales are up big, but existing home sales are down. Case-Shiller and other housing indices continue to show a general slowdown in home price appreciation, even as some local markets remain very hot. Inventory is up, but sales volume is down,” said Zillow Chief Economist Dr. Stan Humphries. “What all of this is really telling us is that the housing market we’re beginning to see emerge from the ashes of the recession is one that is finally transitioning away from being fueled by internal factors like low mortgage interest rates, low inventory and low prices. Instead, it is increasingly being fueled by more traditional outside factors like wage growth, an improving job market and household formations. This transition won’t be seamless, however, and I expect to see more conflicting data as the recovery continues.”

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 June Case-Shiller indices compared, see our research brief from last month.