• Zillow expects annual home value growth to begin a gradual cooldown late this spring. Zillow forecasts 14.9% growth over the next 12 months.  
• 6.09 million existing home sales are expected in 2022, according to our latest forecast, a 0.5% decrease from 2021. 

Zillow’s home value forecast now calls for 14.9% growth through March 2023, down from a year-ahead forecast of 16.5% growth made in February. Over the next three months, Zillow expects home values to grow 5.5%, down from an expectation for 5.9% growth in the previous month’s forecast. 

Zillow’s existing home sales forecast has been lowered as well to an expectation of 6.09 million sales in calendar year 2022, which would mark a slight decline of 0.5% from 2021.

Driving the downwardly revised forecast are affordability headwinds that have strengthened faster than expected, largely due to sharp increases in mortgage rates. Further risks to the outlook as well: Inventory levels remain near record lows, but have the potential to recover faster than anticipated, which could lower future price and sales volume projections.

Even with the downward revision from last month, these figures would represent a remarkably competitive housing market in the coming year. Annual home value growth of 14.9% would have been the highest ever recorded by Zillow before June 2021, and 6.09 million existing home sales would mark the second-best calendar year total since 2006. What’s more, the labor market continues to be a bright spot for housing demand, with a very low national unemployment rate and higher nominal wages, though inflation is putting pressure on household budgets.