Zillow turns housing bear—just look at its updated 2025 forecast

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Zillow turns bearish

Let’s be clear: Zillow economists still aren’t calling for a national home price crash, but they did just turn bearish—at least on 2025.

On Thursday, 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 [active] listings is fueling softer price growth, as greater supply provides more options and more bargaining power for buyers,” write Zillow economists. “Potential buyers are opting to remain renters for longer as affordability challenges suppress demand for home purchases.” 

Pretty much, 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 national home price growth.

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

Click here to view an interactive version of the map below

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%

Among the 300 largest U.S. metro area housing markets, Zillow expects the weakest home price appreciation between March 2025 and March 2026 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. Prior to Zillow’s new forecast, Florida is the epicenter of housing market weakness right now. 

My thoughts on Zillow’s updated regional forecast?

While I agree that there’s growing softness and weakness right now in many pockets of the Sun Belt—especially around the Gulf, which was particularly red-hot during the Pandemic Housing Boom—I think Zillow is too bearish on many markets in the Northeast and Midwest, where active inventory still remains well below pre-pandemic 2019 levels.

I’m a little surprised that Zillow isn’t forecasting home price growth for the Midwest and Northeast. After all, Zillow still considers many pockets of the Midwest and Northeast regions to be seller’s markets.

I should note that not every forecaster is as bearish on 2025 as Zillow.

As of March, Fannie Mae is still forecasting that U.S. home prices, as measured by the Fannie Mae Home Price Index, will rise +1.7% in 2025, while Wells Fargo is forecasting that U.S. home prices, as measured by the Case-Shiller National Home Price Index, will rise +3.0% in 2025.