Zillow Revises Home Price Growth Forecast Downward

Zillow economists have once again adjusted their outlook for U.S. home price appreciation, projecting a more modest increase over the next year. The latest forecast indicates a continued cooling trend in the housing market, influenced by rising inventory and affordability challenges.

Slower Price Growth Anticipated

According to Zillow's updated forecast model, the Zillow Home Value Index is expected to rise by just 0.8% between February 2025 and February 2026. This marks a further downward revision from previous forecasts, which had projected increases of 1.1% and 2.9% in the preceding months. Zillow economists attribute this softer price growth to an increase in active listings, providing buyers with more options and greater negotiating leverage. Additionally, affordability concerns are leading some potential buyers to remain renters for longer, suppressing overall demand for home purchases.

Existing Home Sales Expected to Remain Subdued

Zillow also projects that U.S. existing home sales will reach only 4.1 million in 2025. If this forecast holds true, it would represent the third consecutive year of sales remaining below pre-pandemic levels. For comparison, there were 5.3 million existing home sales in 2019. Zillow economists anticipate a temporary increase in sales during the spring buying season, followed by a seasonal slowdown. However, with limited expectation of significant relief in mortgage rates, existing home sales are likely to remain lower than pre-pandemic figures.

Metro-Level Price Appreciation Variances

While the national forecast points to modest growth, Zillow anticipates significant variations in home price appreciation across different metropolitan areas. The top ten markets expected to see the strongest price increases include areas in New Jersey, Tennessee, New York, Connecticut, Maine, and Arkansas, with projected growth ranging from 3.9% to 5.1%. Conversely, the ten markets predicted to experience the weakest home price appreciation are largely concentrated in Louisiana and Texas, with forecasts ranging from -3.0% to -7.3%. Notably, Zillow expects most Florida markets to see price increases, although some skepticism remains due to a substantial rise in active inventory in the state.

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