BY LANCE LAMBERT1 MINUTE READ
Why such a significant upward revision?
Zillow recently made a big change to its home price forecast. Now it’s predicting that U.S. home prices will rise this year, with an increase of 3.5% between December 2023 and December 2024. If that prediction comes to fruition, it would mean that national home prices in 2024 would see almost identical home price growth as in 2023, which was 3.2%.
With the exception of San Francisco and several housing markets in Louisiana, Zillow expects prices to rise across the board this year.
The map below shows Zillow’s regional home price forecast for the nation’s 400 largest markets.
This is a pretty big forecast revision.
Back in November, Zillow shifted its forecast downward, publishing a 12-month forecast predicting that U.S. home prices would fall -0.1% between October 2023 and October 2024.
The image below shows Zillow’s 12-month regional home price outlook released in November [on the left] next to its 12-month outlook released this month [on the right].
Just as Zillow's forecast model became more bearish in the fall when the average 30-year fixed mortgage soared over 7.5%, it has now reversed and become a bit more bullish as the average 30-year fixed-rate mortgage has fallen back under 7%. That shift in financial markets/mortgage rates may have influenced the model.
Final point: We just experienced an unprecedented period marked by a pandemic, lockdowns, historic stimulus, ultra-low interest rates, an inflationary shock, and a historic interest rate shock. Forecasting during and after all of that has been challenging. In August, Skylar Olsen, Zillow’s chief economist, concurred, telling me that “ANY [home price] forecast right now comes with high margins of error.”