Nov. 2014 Case-Shiller Forecast: Home Price Changes Slowing, But Still Growing

The October S&P/Case-Shiller (SPCS) data released this morning showed more slowing in the housing market, with annual growth in national home prices falling to 4.6 percent. Annual appreciation in home values has been below 5 percent for the past two months, and we anticipate this trend to continue into the future. The 10- and 20-City Indices also saw annual growth rates decline in October; the 10-City index rose 4.4 percent, while the 20-City Index rose 4.5 percent – down from rates of 4.5 percent and 4.7 percent, respectively, in September.

Our forecast for November SPCS indicates that the slowing in home price gains will continue into November. Zillow predicts the national SPCS to rise 4.5 percent on an annual basis.

The non-seasonally adjusted (NSA) 20-City index fell 0.1 percent from September to October, and we expect it to decrease 0.2 percent in November. We also expect a monthly decline in the 10-City Composite Index next month, falling 0.2 percent from October to November (NSA).

All forecasts are shown in the table below. These forecasts are based on the October SPCS data release and the November 2014 Zillow Home Value Index (ZHVI), released Dec. 19. Officially, the SPCS Composite Home Price Indices for November will not be released until Tuesday, Jan. 27.

This month’s (October) SPCS release shows increases month-over-month for the seasonally adjusted composite series, while on a non-seasonally adjusted basis, the series fell. Eight cities covered by the index had both NSA and SA index gains, with the most notable gains (NSA) in San Francisco and Tampa. All 20 markets covered by the SPCS shows month-over-month gains from September to October on a seasonally adjusted basis.

The Zillow Home Value Index was up 6 percent year-over-year in November. The rate of annual appreciation has fallen every month since April, and we expect the slowdown to continue into 2015. The November Zillow Home Value Forecast calls for a 2.4 percent rise in home values through November 2015, less than half the current rate of appreciation. Further details on our forecast of home values can be found here, and more on Zillow’s full November 2014 report can be found here.

More on the differences between SPCS and ZHVI can be found here. Our commentary on the revisions to the national S&P/Case-Shiller Index can be found here.