November Case-Shiller Results and December Forecast: Primed for an Upswing

• The S&P CoreLogic Case-Shiller U.S. National Home Price Index® rose 3.5% year-over-year in November (non-seasonally adjusted), up from 3.2% in October. Annual growth was also up from September in the smaller 10-city index (to 2%, from 1.7%) and in the 20-city index (to 2.6%, from 2.2%).
• Phoenix (+5.9%), Charlotte (+5.2%) and Tampa (+5%) reported the highest year-over-year gains among markets in the 20-city index.

After a yearlong slowdown in 2019, home values appear primed to go back on the upswing to start 2020.

The national Case-Shiller Home Price Index rose 3.5% year-over-year in November. The smaller 10- and 20-city composite indices grew more slowly, at 2% and 2.6% year-over-year, respectively. The annual rate of growth was higher in November than in October in all three indices. On a monthly (seasonally adjusted) basis, all three indices rose 0.5% from October to November.

Index	Zillow Forecast, Released 12/31/19	Actual Case-Shiller Indices, Released 1/28/20	Historical Median Absolute Error*
10-City Composite, Month-Over-Month (SA)	0.2%	0.5%	0.2%
10-City Composite, Year-Over-Year (NSA)	2.0%	2.0%	0.2%
20-City Composite, Month-Over-Month (SA)	0.3%	0.5%	0.2%
20-City Composite, Year-Over-Year (NSA)	2.5%	2.6%	0.1%
U.S. National Month-Over-Month (SA)	0.3%	0.5%	0.1%
U.S. National Year-Over-Year (NSA)	3.5%	3.5%	0.1%
*Calculation of Median Absolute Errors are based on Zillow’s forecasts dating to 2011.  The national Case-Shiller forecasts began in 2014.

The main driver in this acceleration is clearly the ongoing and historic lack of for-sale inventory, though a strong job market, stabilizing geopolitical tensions and still-low mortgage rates have played their part. Even taking seasonal factors into consideration, the number of homes available for sale fell consistently through the latter part of 2019 and now sits near the lowest level on record. This lack of homes has made competition among buyers — buoyed by otherwise favorable economic conditions — even more fierce, in turn helping to push up prices even faster. Indeed, homebuying activity has picked up in recent months, with sales of existing homes reaching their highest level in nearly two years in December.

This shortage of homes on the market poses a looming threat to the housing market: Home values are likely to continue to reaccelerate, but many more for-sale homes are needed in order to ensure that price growth is sustainable and not the start of another period of overheated growth that ultimately turns away more buyers than it attracts.

Annual growth in December as reported by Case-Shiller is expected to accelerate in all three major indices. S&P Dow Jones Indices is expected to release data for the December S&P CoreLogic Case-Shiller Indices on Tuesday, Feb. 25.

Index	Actual November Case-Shiller Change	Zillow’s Forecast for the Case-Shiller December Indices
10-City Composite, Month-Over-Month (SA)	0.5%	0.3%
10-City Composite, Year-Over-Year (NSA)	2.0%	2.7%
20-City Composite, Month-Over-Month (SA)	0.5%	0.4%
20-City Composite, Year-Over-Year (NSA)	2.6%	3.2%
U.S. National Month-Over-Month (SA)	0.5%	0.4%
U.S. National Year-Over-Year (NSA)	3.5%	4.1%

 

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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