• Zillow expects home values to grow 13.6% between October 2021 and October 2022, and to end 2021 up 19.5% from December 2020.
• Existing home sales are expected to total 6.12 million in 2021, up 8.5% from 2020.

Home sales activity — which has exceeded expectations in recent months — is expected to get stronger in the near- and longer-terms, while home value growth is likely to slow somewhat through the end of the year but to remain very strong compared to historic norms.

Home values are expected to grow 3.8% in the three month period from October to January 2022, and to end 2021 up 19.5% from the end of 2020. The near-term, three-month forecast is slightly lower than the 4.4% growth expected previously from September to December, largely driven by recent slowdowns (however modest) in home value growth observed throughout the summer and early fall. Over the longer-term, however, our expectations for home value growth have held firm: We expect home values to grow 13.6% over the twelve months ending October 2022, identical to our previous forecast (September 2021-September 2022). The strong long-term outlook is driven by our expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes. 

We currently expect 6.12 million existing home sales to close in 2021, up 8.5% from an already strong 2020 and also up from our previous forecast of 6.04 million sales this year. Existing home sales volume rose to 6.29 million (SAAR) in September — up 7% from August, the fastest one-month growth in the annualized series since last fall. This stronger-than-expected showing is the main contributor to the upward revision in our near-term outlook for the series. Our longer-term forecast for sales was also revised up, in part due to changes in home affordability. Though sharply rising home prices present affordability challenges for many, low mortgage rates continue to keep monthly payments manageable for those who can afford a down payment.

However, downside risks to our forecast remain. The expiration of mortgage forbearance programs adds uncertainty to the outlook for for-sale inventory, and elevated inflation heightens the risk of near-term monetary policy tightening, which would result in higher mortgage rates and weigh on housing demand.