Zillow economists predict a decline in U.S. home prices by 2.0% for 2025, adjusting their previous estimate of an increase of 2.6%. Rising active listings are leading to softer price growth, with supply giving buyers more bargaining power and causing potential buyers to delay purchases due to affordability concerns. The significant price increases during the pandemic and rising mortgage rates have exacerbated these issues. Zillow notes that while sellers are entering the market, buyer demand has not matched this increase, leading to a forecasted inventory buildup and further price declines.
"The rise in [active] listings is fueling softer [home] price growth, as greater supply provides more options and more bargaining power for buyers."
"Potential buyers are opting to remain renters for longer as affordability challenges suppress demand for home purchases."
"Essentially, Zillow believes that strained housing affordability-driven by U.S. home prices soaring over 40% during the Pandemic Housing Boom and mortgage rates jumping from 3% to 6% in 2022-is putting upward pressure on active inventory growth and short-term downward pressure on home price growth."
"Sellers have been motivated to join the market through the first half of the year, but buyer demand hasn't kept up."
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