Zillow (ZG, Financial), a leading U.S. real estate platform, has revised its U.S. home price forecast downward multiple times. Initially predicting a 0.8% rise in March, Zillow now anticipates a 1.7% decline from March 2025 to March 2026. This shift is attributed to high home prices and mortgage rates, which are suppressing buyer demand, while an increase in listings is providing more negotiation leverage for buyers.
The economic impact of the COVID-19 pandemic saw U.S. home prices surge over 40%, with mortgage rates jumping from 3% to 6% in 2022, significantly affecting affordability. Zillow's economists note that rising listings are slowing price growth by offering buyers more options and bargaining power. Many potential buyers are opting to rent due to affordability pressures, further dampening demand.
Regional disparities are evident, with the Sun Belt facing the most pressure. Florida is currently at the center of this market weakness. Zillow forecasts that while some markets in Louisiana and Texas may experience significant declines, certain areas in the Northeast might see modest growth.
