Zillow is not only revising its Premier Agent payment and procedural strategies, the company is also revising its forecasts relative to home value growth and sales.
Zillow Downgrades its Expectations on Home Value & Sales Going Forward
Zillow is adjusting its expectations about home value and sales growth downward to better reflect current market conditions going forward for the next three months.
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Zillow now expects home value growth to come in at +14.9% through March 2023 rather than its February estimate of 16.5%. Likewise, Zillow now expects sales growth to be 5.5% instead of its previous estimate of +5.9%
Why the Reduced Expectations?
“Driving the downwardly revised forecast are affordability headwinds that have strengthened faster than expected, largely due to sharp increases in mortgage rates,” Zillow’s latest forecasting estimates report. “Further risks to the our outlook (reinforce these revisions) as well: inventory levels remain near record lows, but have the potential to recover faster than anticipated, which could lower future price and sales volumes projections.”
Though Reduced, Expectations Remain Optimistic
Despite mortgage rates topping 5% in mid-late April, 5.37% to be exact, Zillow continues to see a competitive market for homebuyers. An estimate of +14.9% in home value growth would be the highest ever home value growth recorded by Zillow prior to June 2021. An estimate of selling 6.09M existing homes would be the second-highest sales total since 2006.
“What’s more,” according to Zillow’s report, “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.”
Other Research Firms Less Optimistic than Zillow
CoreLogic, Mortgage Bankers Association (MBA) and Fannie Mae are less optimistic about home price growth than Zillow’s now more modest projections.
CoreLogic projects a deceleration in home price growth from February’s +17% growth rate to 5% in 2023. The MBA anticipates home prices to increase +4.8% over the next year. Fannie Mae projects home price growth to come in at +11.2% this year and +4.2% in 2023.
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