Zillow turns full-blown housing market bear—just look at its new forecast

Want more housing market stories from Lance Lambert’s ResiClub in your inbox? Subscribe to the ResiClub newsletter.

Once again, Zillow has downgraded its 12-month forecast for national home prices. On Wednesday, Zillow economists published their updated forecast model, projecting that U.S. home prices, as measured by the Zillow Home Value Index, will fall 1.7% between March 2025 and March 2026.

Back in March, Zillow downgraded its 12-month outlook for U.S. home prices to +0.8%. In February, Zillow downgraded its 12-month outlook to +1.1%. And at the start of the year in January, Zillow’s 12-month national home price forecast was +2.9%.

Why does Zillow keep downgrading its national home price outlook?

“The rise in listings is fueling softer price growth, as greater supply provides more options and more bargaining power for buyers,” Zillow economists wrote in March. “Potential buyers are opting to remain renters for longer as affordability challenges suppress demand for home purchases.”

Essentially, Zillow thinks strained housing affordability—caused by U.S. home prices rising over 40% during the pandemic housing boom and mortgage rates spiking from 3% to 6% in 2022—is weighing on price growth.

According to Zillow’s home price model, the listing site also believes that weakening and softening housing markets across the Sun Belt will weigh on nationally aggregated home prices this year.

!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e;i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"]+"px";r.style.height=d}}}))}();

Among the 300 largest U.S. metro area housing markets, Zillow expects the strongest home price appreciation between March 2025 and March 2026 to occur in these 10 areas:

1. Atlantic City, NJ: 2.4%
2. Kingston, NY: 1.9%
3. Rochester, NY: 1.8%
4. Knoxville, TN: 1.7%
5. Torrington, CT : 1.6%
6. Bangor, ME: 1.5%
7. Syracuse, NY: 1.4%
8. Vineland, NJ: 1.4%
9. Concord, NH: 1.3%
10. Norwich, CT: 1.2%

In that same time frame, Zillow expects the weakest home price appreciation to occur in these 10 areas:

1. Houma, LA: -10.1%
2. Lake Charles, LA: -8.9%
3. New Orleans, LA: -7.6%
4. Lafayette, LA: -7.5%
5. Shreveport, LA: -7.0%
6. Alexandria, LA -7.0%
7. Beaumont, TX : -6.6%
8. Odessa, TX: -6.3%
9. Midland, TX: -5.7%
10. Monroe, LA: -5.5

Below is what the current year-over-year rate of home price growth looks like for single-family and condo home prices. Florida is currently the epicenter of housing market weakness right now.

!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e;i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"]+"px";r.style.height=d}}}))}();