by Calculated Risk on 6/01/2013 03:28:00 PM

The Case-Shiller house price indexes for April will be released Tuesday, June 25th. Zillow has started forecasting Case-Shiller a month early - and I like to check the Zillow forecasts since they have been pretty close. Note: Zillow makes a strong argument that the Case-Shiller index is currently overstating national house price appreciation.

Zillow: April Case-Shiller Composite To Show Annual Appreciation Above 12%

Buckle up, folks. If you thought the Case-Shiller numbers ... for March were eye-popping, just wait until next month. Our updated forecast indicates that the April 20-City Composite Case-Shiller Home Price Index (non-seasonally adjusted [NSA]) will rise 12.1 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will increase 11.4 percent from year-ago levels. The seasonally adjusted (SA) month-over-month change from March to April will be 1.7 percent for both the 20-City Composite and the 10-City Composite Home Price Indices (SA).
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As we’ve described , the Case-Shiller indices are giving an inflated sense of national home value appreciation because they are biased toward the large, coastal metros currently seeing such enormous home value gains, and because they include foreclosure resales. The inclusion of foreclosure resales disproportionately boosts the index when these properties sell again for much higher prices — not just because of market improvements, but also because the sales are no longer distressed. In contrast, the ZHVI does not include foreclosure resales and shows home values for April 2013 up 5.2 percent from year-ago levels. We expect home value appreciation to continue to moderate in 2013, rising only 4 percent between April 2013 and April 2014. Further details on our forecast of home values can be found here, and more on Zillow’s full April 2013 report can be found here.

To forecast the Case-Shiller indices, we use the March Case-Shiller index level, as well as the April Zillow Home Value Index (ZHVI), which is available more than a month in advance of the Case-Shiller index, paired with April foreclosure resale numbers, which Zillow also publishes more than a month prior to the release of the Case-Shiller index. Together, these data points enable us to reliably forecast the Case-Shiller 10-City and 20-City Composite indices.

The following table shows the Zillow forecast for the April Case-Shiller index.

Zillow April Forecast for Case-Shiller Index
		Case Shiller Composite 10		Case Shiller Composite 20
		NSA	SA	NSA	SA
Case Shiller (year ago)	Apr 2012	148.44	151.51	135.98	138.90
Case-Shiller (last month)	Mar 2013	161.48	165.06	148.65	151.71
Zillow Forecast	YoY	11.4%	11.4%	12.1%	12.1%
	MoM	2.4%	1.7%	2.5%	1.7%
Zillow Forecasts1		165.4	168.3	152.4	155.0
Current Post Bubble Low		146.46	149.59	134.07	136.83
Date of Post Bubble Low		Mar-12	Jan-12	Mar-12	Mar-12
Above Post Bubble Low		12.9%	12.5%	13.7%	13.3%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts