Zillow is forecasting stronger growth in home sales through the end of the year while the rate of home value appreciation will be slower.
Home values are expected to grow 4.4% from September through the end of this year, and to end 2021 up 19.5% from the end of 2020. The near-term, three-month forecast is slightly lower than the 4.7% growth expected previously from August to November, largely driven by recent slowdowns (however modest) in home value growth observed throughout the summer. Over the longer-term, however, our expectations for home value growth have strengthened, from an initial forecast of 11.7% through August 2022 to a revised forecast of 13.6% through September 2022. The relatively strong long-term outlook is driven by the slowdown in inventory growth, coupled with stronger pending home sales and for-purchase mortgage applications activity — which is expected to lead to tighter longer-term market conditions (and faster home value appreciation) than previously expected.
We currently expect 6.04 million existing home sales to close in 2021, up 7% from an already strong 2020 and also up from prior forecasts of 5.93 million sales this year.
Like longer-term home value growth, strong recent growth in pending home sales and for-purchase mortgage applications combined to drive up our sales expectations for the remainder of this year. Our longer-term forecast for sales was also revised up, in part due to changes in home affordability. Though affordability continues to worsen, it’s doing so at a slower pace than we had previously expected and therefore placing less downward pressure on our long term outlook.