Zillow economists have revised the housing market outlook, forecasting a 2.9% increase in U.S. home prices over the next year, as measured by the Zillow Home Value Index. The updated projection, which covers the period from October 2024 to October 2025, reflects the interplay of factors influencing the real estate market, including tight inventory, shifting mortgage rates, and regional economic conditions.
National Outlook: A Modest Rise
upward revision is attributed to persistently low housing inventory, which continues to drive price growth despite high mortgage rates. Zillow anticipates that declining mortgage rates and slight improvements in indicators of home sales activity will further support this trend. However, the impact of new listings entering the market and the weight of high borrowing costs are expected to limit the pace of price increases.
“Our forecast reflects opposing forces in the market,” Zillow economists stated. “While inventory remains low and bolsters home values, high mortgage rates and a modest increase in new listings are keeping growth restrained.”
The report also highlights expectations for a gradual uptick in existing home sales. Zillow projects 4.3 million transactions in 2025, a slight increase from 4.1 million in 2023 and 4 million anticipated in 2024.
Regional Disparities: Top Markets for Growth
Zillow’s forecast reveals a stark divide among U.S. housing markets, with certain regions poised for significant appreciation while ors face declines.
Top 10 Markets for Home Price Growth (October 2024–October 2025):
- Atlantic City, NJ: +6.5%
- Kingston, NY: +6.1%
- Augusta, ME: +6.1%
- Pottsville, PA: +5.9%
- Knoxville, TN: +5.8%
- Vineland, NJ: +5.7%
- Lewiston, ME: +5.7%
- Concord, NH: +5.6%
- Bangor, ME: +5.3%
- Muncie, IN: +5.3%
Se markets are benefiting from a combination of affordability, economic growth, and demand from buyers seeking opportunities outside of major metropolitan areas.
Weakest Markets: Declines in South and Beyond
In contrast, several markets are projected to experience declining home prices.
Bottom 10 Markets for Home Price Growth:
- Lake Charles, LA: -7.8%
- Houma, LA: -5.8%
- Lafayette, LA: -4.0%
- Johnstown, PA: -3.9%
- New Orleans, LA: -3.8%
- Eureka, CA: -3.4%
- Beaumont, TX: -3.1%
- Odessa, TX: -3.0%
- Shreveport, LA: -2.9%
- Hammond, LA: -2.9%
Economic challenges, population stagnation, and local oversupply are cited as contributing factors to declining prices in some areas.
Florida’s Mixed Outlook
Florida’s housing market offers a complex picture. Zillow expects home prices in the state to rise, but analysts warn of potential risks. Increased inventory levels and months of supply have already led to falling condo prices in several Florida markets. Southwest regions like Punta Gorda and Cape Coral are also experiencing declines in single-family home prices, reflecting localized imbalances in supply and demand.
Looking Ahead
Zillow’s revised forecast underscores the complexity of the .S. housing market. While national trends point to modest growth, regional variations highlight the importance of local dynamics. Buyers and sellers will need to navigate the challenges, weighing broader economic factors like mortgage rates against specific conditions in our target markets.
As inventory shortages persist and mortgage rates evolve the real estate landscape will remain a careful balancing act in the year ahead.