- Zillow’s housing market outlook has been revised down from April. Zillow forecasts 11.6% home value growth over the next 12 months (May 2022-April 2023).
- 5.73 million existing home sales are expected in 2022, according to Zillow’s latest forecast, a 6.4% decrease from 2021.
Zillow’s home value forecast calls for a gradual slowdown in annual home value growth from the current pace of 20.9% to 11.6% growth through April 2023. That’s down from a year-ahead forecast of 14.9% growth made in March. Over the next three months, Zillow expects home values to grow 5.2%, down from an expectation for 5.5% growth in the previous month’s forecast.
Zillow’s forecast for existing home sales has been lowered as well, now predicting 5.73 million sales in 2022. That would mark a 6.4% decrease from 2021.
These downwardly revised projections would still represent a very strong housing market in the coming year. In the history of the Zillow Home Value Index, which dates back to 2000, annual growth has only exceeded the current year-ahead projection of 11.6% during this recent run of record-breaking growth, and during a several-month stretch in 2005. And while 5.73 million existing home sales would be a decrease from a remarkably strong 2021, that would mark the second-best calendar year total since 2006.
Spiking mortgage rates, inventory gains, and lower-than-expected pending home sales and mortgage application data drove the downward revision.
Labor market conditions will be closely monitored in the coming months as future forecasts are released. Current labor market conditions are strong, but the impact of expected rate hikes from the Federal Reserve is uncertain. Continued strength in the job market would keep pressure on housing demand and thus home value growth.
