Zillow’s housing market forecast has been revised down for April after a drop in home sales caused by elevated mortgage rates. Zillow’s home value forecast anticipates deceleration in annual home value growth from the current pace of 20.9% to 11.6% growth over the next year. Existing home sales are also expected to fall 6.4% from 2021 to 5.73 million sales in 2022, but downwardly revised projections aren’t an indication of a weak housing market.
Instead, the market is expected to remain strong over the coming year as conditions slowly become more balanced and stable following a mid-pandemic buying frenzy amid record high prices and an unprecedented housing shortage. Slower home sales will soften a volatile market and lead to price reductions and less buyer competition in the long run, according to Zillow.
In the history of the Zillow Home Value Index, which dates back to 2000, annual growth has only exceeded the current year-ahead projection of 11.6% during this recent run of record-breaking growth, and during a several-month stretch in 2005. And while 5.73 million existing home sales would be a decrease from a remarkably strong 2021, that would mark the second-best calendar year total since 2006.
Spiking mortgage rates, inventory gains, and lower-than-expected pending home sales and mortgage application data drove the downward revision.
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