August Case-Shiller Results and September Forecast: Stabilizing, not Swooning

• The S&P CoreLogic Case-Shiller U.S. National Home Price Index® rose 3.2% year-over-year in August (non-seasonally adjusted), up from 3.1% in July. Annual growth in the smaller 10-city index was slightly slower than July, and was unchanged in the 20-city index.
• Phoenix (+6.3%), Charlotte (+4.5%) and Tampa (+4.3%) reported the highest year-over-year gains among markets in the 20-city index.

Despite some indications the market may be hitting a turning point, the general pace of home price growth continues to slow and come back in line with historic norms.

The national Case-Shiller Home Price Index rose 3.2% year-over-year in August, in line with expectations. The smaller 10- and 20-city composite indices grew more slowly, at 1.5% and 2% year-over-year, respectively. On a monthly (seasonally adjusted) basis, the 10-city index fell by 0.1% in August from July, while the 20-city index was down 0.2% over the same period.

Index	Zillow Forecast, Released 9/24/19	Actual Case-Shiller Indices, Released 10/29/19	Historical Median Absolute Error*
10-City Composite, Month-Over-Month (SA)	-0.1%	-0.1%	0.2%
10-City Composite, Year-Over-Year (NSA)	1.3%	1.5%	0.2%
20-City Composite, Month-Over-Month (SA)	-0.1%	-0.2%	0.2%
20-City Composite, Year-Over-Year (NSA)	1.8%	2.0%	0.1%
U.S. National Month-Over-Month (SA)	0.3%	0.3%	0.1%
U.S. National Year-Over-Year (NSA)	3.2%	3.2%	0.1%
*Calculation of Median Absolute Errors are based on Zillow’s forecasts dating to 2011.  The national Case-Shiller forecasts began in 2014.

Rather than signifying an impending housing swoon, this slowdown should more accurately be read as stabilization after years of imbalance between buyers and sellers. Demand for housing is staying strong, and homebuyers remain optimistic about the state of the market, insisting that now is as good a time to buy as any since at least last year. A severe and enduring shortage of inventory, particularly at entry-level price points, does continue to impede many would-be buyers' aspirations and is somewhat worrisome. Recent, encouraging home sales reports suggest that a sharp slowdown in the housing market is unlikely, and that a modest reacceleration of home value appreciation may be coming soon.

In the meantime, September data as reported by Case-Shiller are expected to show continued modest deceleration in annual growth in the 10-city and U.S. National indices, while growth in the 20-city index is expected to remain the same. S&P Dow Jones Indices is expected to release data for the September S&P CoreLogic Case-Shiller Indices on Tuesday, Nov. 26.

Index	Actual August Case-Shiller Change	Zillow’s Forecast for the Case-Shiller September Indices
10-City Composite, Month-Over-Month (SA)	-0.1%	-0.1%
10-City Composite, Year-Over-Year (NSA)	1.5%	1.4%
20-City Composite, Month-Over-Month (SA)	-0.2%	0.0%
20-City Composite, Year-Over-Year (NSA)	2.0%	2.0%
U.S. National Month-Over-Month (SA)	0.3%	0.1%
U.S. National Year-Over-Year (NSA)	3.2%	3.1%

 

Note: Case-Shiller and Case-Shiller Index are registered trademarks of CoreLogic Solutions, LLC. The statements herein are not endorsed by or provided in association or connection with CoreLogic, LLC.

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