Why Zillow is Predicting 11.6% US Housing Market Growth Over the Next 12 Months

When it comes to predicting the US housing market, few could claim they understand what’s happening better than Zillow, one of the most popular real estate listings services in the US.

If you’re hoping to buy a house any time soon, there’s a mixture of good and bad news — the good news is that Zillow has downgraded its predictions from April 2022.

The bad news is that it’s still expecting double-digit price growth over the next year.

Zillow’s Predictions for the US Housing Market

Zillow carries out a market research report every month, which focuses on predicting trends within the real estate market over the next year. Its latest piece projects 11.6% growth in home prices between May 2022 and April 2023.

While that might sound like a lot, it’s a lot lower than Zillow’s previous report, which forecasted a massive 14.9% growth over the next year.

Why Price Growth is Slowing (But Not Stopping)

There are two phenomena to analyze here: Why price growth is slowing compared to 2021, and why it’s still growing at all with such poor market conditions. Let’s answer both.

Why Price Growth is Slowing

A major factor in slowing price growth is the Federal funds rate increase, which rose in May 2022 to 0.75%.

This has made it more expensive to get a mortgage, contributing to lower demand for housing — especially when combined with increasing costs of living due to inflation and wages that are failing to keep up.

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