by Calculated Risk on 1/28/2014 06:48:00 PM

The Case-Shiller house price indexes for November were released today. Zillow has started forecasting Case-Shiller a month early - and I like to check the Zillow forecasts since they have been pretty close.   It looks like another very strong month ...

From Zillow: Case-Shiller Forecast: Apprieciation Remains Strong

The Case-Shiller data for November came out this morning, and based on this information and the December 2013 Zillow Home Value Index (ZHVI, released January 22) we predict that next month’s Case-Shiller data (December 2013) will show that the non-seasonally adjusted (NSA) 20-City Composite Home Price Index and the NSA 10-City Composite Home Price Index increased 13.5 and 13.6 percent on a year-over-year basis, respectively. The seasonally adjusted (SA) month-over-month change from November to December will be 0.7 percent for both the 20-City Composite and the 10-City Composite Home Price Indices (SA). All forecasts are shown in the table below. Officially, the Case-Shiller Composite Home Price Indices for December will not be released until Tuesday, Feb. 25.

The Zillow Home Value Index continues to show slow moderation in home value appreciation, as well as a fair amount of volatility in home value growth as the housing recovery continues. Case-Shiller indices have shown very little slowing in monthly appreciation and have not yet recorded monthly declines (at least not in their seasonally-adjusted monthly numbers). Even when the Case-Shiller indices do begin to show monthly depreciation in some areas, they will continue to show an inflated picture of home prices, especially when considering year-over-year growth. The Case-Shiller indices are biased toward the large, coastal metros currently seeing enormous home value gains, and 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 December 2013 up 6.4 percent from year-ago levels. More on the differences between a repeat sales index, including the Case-Shiller indices, and an imputed hedonic index like the ZHVI can be found here. We expect home value appreciation to continue to moderate through the end of 2013 and into 2014, rising 4.8 percent between December 2013 and December 2014 — a rate much more in line with historic appreciation rates.

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

Zillow December Forecast for Case-Shiller Index
		Case Shiller Composite 10		Case Shiller Composite 20
		NSA	SA	NSA	SA
Case Shiller (year ago)	Dec 2012	158.60	159.28	146.08	146.75
Case-Shiller (last month)	Nov 2013	180.15	179.7	165.80	165.41
Zillow Forecast	YoY	13.6%	13.6%	13.5%	13.5%
	MoM	0.0%	0.7%	0.0%	0.7%
Zillow Forecasts1		180.2	180.9	165.8	166.6
Current Post Bubble Low		146.45	149.67	134.07	136.91
Date of Post Bubble Low		Mar-12	Jan-12	Mar-12	Jan-12
Above Post Bubble Low		23.0%	20.9%	23.7%	21.7%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts