Zillow's Revised Forecast
Zillow has revised its housing market forecast, predicting an increase in home values and sales through 2025. They now anticipate home values to climb by 2% this year and by 1% over the next 12 months ending in June 2025. This is an upward revision from last month's projection, which forecasted a 4% gain this year followed by a 1.4% decrease over the next year.
Current Home Prices
According to Redfin's data, the median home price on a national level increased by 4% over the four weeks ending July 21, reaching $395,000. Last year's end saw prices at $361,000, marking a 4% gain as well.
Seasonality in Home Values
Home values typically increase during the spring home-buying season, peak in the summer, and decrease for the remainder of the year. This pattern was observed in 2021, 2022, and last year.
Existing Home Sales Forecast
Zillow is forecasting 4.2 million existing home sales this year, reflecting a 2.3% growth rate over last year's numbers. This is an increase from their previous forecast of 4.12 million sales. However, the prediction is still lower compared to the 6.12 million sales in 2021, a 15-year high.
Historical Context
The 4.1 million existing home sales in 2023 were the fewest since 1995. Zillow's forecast for this year, if accurate, would be the fewest number of sales since 2018, excluding last year.
Inventory and Demand Dynamics
Zillow's outlook suggests that inventory is expected to rise as new listings increase, but demand is recovering less rapidly. This means there could be more supply than demand, potentially leading to more price reductions and decreased competition among buyers.
