Zillow Home Value and Sales Forecast: May 2023

• Zillow forecasts that home values will grow 3.9% in 2023. That is a significant increase from last month’s forecast. 
• Zillow expects 4.36 million existing home sales in 2023, which would mark a 13% decline from 2022. 

Zillow has significantly revised its outlook for home value growth this year, now projecting a 3.9% increase for 2023. Monthly home value growth accelerated in April, roughly matching what would have been expected pre-pandemic for the second month in a row, helping drive Zillow’s forecast higher. 

Zillow’s long-term expectation for mortgage rates has been revised downward, which would improve housing affordability for prospective home buyers and provide a tailwind to housing demand. The looming threat of a debt default could send mortgage rates soaring without a resolution, though that appears unlikely. 

In addition, Zillow now forecasts lower for-sale inventory than had been forecast in prior months. The expected combination of better affordability with tighter inventory accounts for the prediction for more upward pressure on home values. 

Zillow’s forecast for existing home sales this year was little changed from a month ago, revising upward slightly from 4.33 million to 4.36 million. An expectation for lower mortgage rates — a boon for demand — was offset by the lower projection for inventory. The forecasted 4.36 million existing home sales in 2023 would be 13% lower than in 2022.