AUGUST 4, 2022
A house with a large front lawn. – Getty Images
There’s only one housing bull left standing: Zillow.
Not only does Zillow disagree with the “home price correction” narrative, the Seattle-based home listing site thinks the pandemic housing boom has some gas left in the tank. Between July 2022 and June 2023, Zillow predicts that U.S. home prices will rise another 7.8% (scroll down to find the metro-level predictions). That’s well above the 4.6% average annual appreciation posted since 1987.
Research groups like Zelman & Associates, Capital Economics, and John Burns Real Estate Consulting all believe the country is inching closer to falling house prices. Spiked mortgage rates, in their view, pushed the “overvalued” U.S. housing market over the edge. That raises the question: Why does Zillow remain so bullish?
A lot of it boils down to supply. Between the first week of January and the first week of July, inventory levels on Zillow.com jumped 18%—going from 546,800 listings to 642,800 listings. Even with that jump, we’re still in a historically tight market. Inventory remains 54% below the 1.4 million active listings we had in July 2019. As long as inventory remains scarce, it’s unlikely that existing home prices will fall.
That said, this latest Zillow forecast does mark another downward revision. In the face of weakening housing data, Zillow cuts its year-over-year home price outlook from 9.7% to 7.8%. That’s the fourth consecutive month Zillow has issued a downward revision.
“The housing market is quickly rebalancing from what had been arguably the strongest sellers’ market in decades, with inventory rising and competition for homes easing in the face of significant affordability challenges. The rebalancing is expected to continue given current macroeconomic headwinds,” write Zillow researchers.
Nationally, Zillow foresees 7.8% house price growth over the coming 12 months. But regionally, it’ll vary—a lot.
Among the 911 regional housing markets that Zillow economists analyzed, 906 are predicted to see rising house prices between July 2022 and June 2023. Zillow only expects five markets to experience year-over-year declines. The biggest forecasted decline being 6.4% in Greenville, Miss.
Over the coming year, Zillow predicts that 741 markets will see house price growth of 5% or greater. While 136 markets are forecasted to see year-over-year house price growth of 10% or greater. That includes markets like Athens, Ga. (10.3% forecasted growth); Durango, Colo. (10.3%); Grenada, Miss. (10.3%); Fort Myers, Fla.(10.2%); and Morristown, Tenn. (10.2%).
Keep in mind that some of this home price growth is already baked in. On the data collection end, home transactions lag. Many of the home sales that will go final in August and September actually occurred back in June and July.
Over the coming year, Moody’s Analytics forecasts that U.S. house prices will remain unchanged. That’d mark the lowest level of home price appreciation since 2011. But that’s nationally. On a regional level, Moody’s Analytics foresees around half the nation experiencing falling home prices.
Earlier this week, Fortune reached out to Moody’s Analytics to get access to its latest proprietary housing analysis. Researchers at the financial intelligence firm calculated how house prices are likely to shift in over 400 regional housing markets between the fourth quarter of 2022 and the fourth quarter of 2024.
Among the nation’s 414 largest housing markets, Moody’s Analytics predicts that 204 regional housing markets will see rising home prices over the next two years. Meanwhile, Moody’s Analytics expects 210 markets to see falling home prices. The steepest declines, Zandi says, will come in housing markets like Boise and Austin that are significantly “overvalued” relative to underlying economic fundamentals. If a recession comes, those markets could see prices fall by as much as 15% to 20%.
