Today, the S&P/Case-Shiller Home Price Indices showed that the non-seasonally adjusted October 10- and 20-City Composite rose 3.4% and 4.3% on a year-over-year basis, in line with Zillow’s forecast released last week. On a seasonally adjusted monthly basis, the 10- and 20-City Composites rose 0.6% and 0.7% from September to October. The table below shows how our forecast compared with the actual numbers.
“The October non-seasonally adjusted Case-Shiller numbers are down from September due to a normal seasonal slowdown in sales and the fact that the Case-Shiller index includes foreclosure re-sales, which become more dominant in the index in winter months when there are fewer non-foreclosure sales to offset the discounted foreclosures,” said Zillow Chief Economist Dr. Stan Humphries.
“Bottom line: U.S. housing is going to turn in a pretty strong performance overall in 2012, particularly in light of continued high levels of negative equity. In many respects, it’s been a stronger year than most economists expected as the first full year after the post-housing recession low point in home values in late 2011. We should continue to see solid, but moderated, home value appreciation in 2013 in comparison to levels seen this year. However, there are not a lot of historical parallels for this combination of high affordability, low rates, robust investor demand, and high negative equity, making future conditions less predictable than usual,” added Humphries.
Our forecasting model incorporates previous data points of the Case-Shiller series, as well as Zillow Home Value Index data and national foreclosure re-sales. To see how Zillow’s forecast of the September Case-Shiller indices compared, see our blog post from last month.