Zillow’s forecast for existing home sales in 2022 was revised down slightly as leading indicators point to continued slowing in the housing market in the near term.
- Zillow’s forecast for existing home sales in 2022 was revised down slightly as leading indicators point to continued slowing in the housing market in the near term.
- Expectations for continued weakness in home sales volume led Zillow’s one-year home value forecast to be revised downward in November
- Zillow projects typical U.S. home values to fall 0.6% from October 2022 to January 2023, before recovering and posting 0.8% growth by the end of October 2023.
Zillow’s monthly home value forecast expects appreciation to continue to ease down over the coming months. The national Zillow Home Value Index, which rose 11.9% in the 12 months ending in October, is expected to grow by just 0.8% over the next 12 months. This long-term outlook is slightly lower than last month’s call for a 1.2% annual increase. This downward revision is due in large part to expectations for more declines in home sales volume in the coming months. A weaker home sales forecast translates to more inventory, and therefore a faster correction in home values, leading to the downward revision
Zillow’s expects 5.1 million existing homes to be sold in calendar year 2022 – a 16% decrease compared to 2021. This is down slightly from September’s forecast for 5.2 million. High mortgage rates and major affordability challenges are predicted to drive weaker sales in 2023.
As mortgage rates reached 20-year highs in October, both sales and new inventory dropped significantly. Beyond making monthly payments unaffordable for new buyers, the high rates kept owners in their current homes. As buyers and sellers both stepped away from the market, home prices stayed stable.