FinancemarketsMarket Forecasts
Zillow Revises Home Price Forecast for Over 400 Markets
Zillow economists have just published their updated 12-month forecast, projecting that U. S.home prices—as measured by the Zillow Home Value Index—will rise a modest 1. 5% between October 2025 and October 2026.This latest revision represents a slight pullback from last month's more optimistic +1. 9% projection, underscoring the persistent fragility within the national housing landscape.For market watchers, this is more than a simple data point; it's the latest chapter in a volatile year that has seen Zillow's outlook swing dramatically. Heading into 2025, the firm's forecast was a comparatively bullish +2.6%. Yet, as housing markets across the country softened faster than anticipated, a series of downward revisions followed, culminating in a starkly bearish -1.7% projection by April. The narrative began to shift in late spring, however, with the forecast bottoming out and then embarking on a slow, cautious climb—first to +0.4% in August, then to +1. 2% in September, before last month's peak.This month's minor downgrade to +1. 5% suggests the recovery is stabilizing, but at a level that is hardly cause for celebration.While the national forecast is no longer in negative territory, it is not exactly bullish either, reflecting an economy caught between resilient consumer demand and the stubborn weight of elevated mortgage rates. A deeper dive into the metro-level data reveals a nation of starkly diverging fortunes.On the winning side, Atlantic City, New Jersey, leads the pack with a projected +5. 3% price increase, followed by industrial hubs like Rockford, Illinois (+4.8%), and Northeastern stalwarts such as Concord, New Hampshire (+4. 6%).The list of top performers is notably dominated by markets in Connecticut, with New Haven, Hartford, Torrington, and Norwich all expecting gains between 3. 8% and 4.1%, a signal of the Northeast's relative insulation from the Sunbelt's construction boom and its subsequent oversupply issues. Conversely, the list of the 15 largest expected declines paints a grim picture for Louisiana and parts of Texas.Houma, Louisiana, is projected to see a dramatic -7. 8% drop, with Lake Charles (-7.3%), New Orleans (-4. 7%), and Shreveport (-4.3%) not far behind. The concentration of weakness in this region points to deeper economic vulnerabilities, perhaps tied to the volatile energy sector.Notably, former high-flyer Austin, Texas, finds itself among the biggest decliners at -2. 6%, a stark reminder of how quickly momentum can reverse in markets that overheated during the pandemic buying frenzy.Even the tech titan San Francisco is forecast for a -2. 2% dip, indicating that high costs and remote work trends continue to exert pressure.The current national picture, with home prices up a mere 0. 01% year-over-year, is a testament to this standoff.If Zillow's +1. 5% outlook materializes, it would represent a slight acceleration, but one that remains well below historical norms for a growing economy.As Kara Ng, a senior economist at Zillow, noted in an October report, the balance of power is shifting. 'A year ago, 6 of the nation’s 50 largest metros were buyer’s markets; this September, buyers have the edge in 15 metros,' she wrote, identifying Miami, New Orleans, Austin, Jacksonville, and Indianapolis as the strongest buyer's markets, largely due to a surge of new construction.Meanwhile, the hottest seller's markets—Buffalo, Hartford, San Jose, San Francisco, and New York—are in regions where stringent land use restrictions have kept a lid on new supply. This bifurcation is the defining feature of the current housing cycle, a tale of two markets where local economic fundamentals, zoning laws, and inventory levels are proving far more decisive than any national interest rate policy.
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