Where home prices are headed, according to Zillow's latest forecast

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This week, Zillow economists announced they expect U.S. home prices, as measured by the Zillow Home Value Index, to rise +2.9% between October 2024 and October 2025.

“This is an upward revision to our outlook from last month. Opposing forces are working to keep home values climbing, but only at a modest pace. Inventory remains very low by historical standards, which, paired with expectations for declining mortgage rates and modest improvements in other leading indicators of home sales, is helping to buoy home value appreciation. At the same time, modest increases in new for-sale listings and persistently high mortgage rates are combining to limit price growth,” wrote Zillow economists.

While Zillow economists predict a 2.9% increase in national home prices next year, they only expect “a gradual increase in existing home sales in the coming year, with an estimated 4.3 million sales in 2025, up slightly from the 4.1 million transactions recorded in 2023 and 4 million projected for 2024.”

Click here to view an interactive version of the map below

Among the 400 largest U.S. housing markets, Zillow expects the strongest home price appreciation between October 2024 and October 2025 to occur in…

1. Atlantic City, NJ —> +6.5% 

2. Kingston, NY —> +6.1% 

3. Augusta, ME —> +6.1% 

4. Pottsville, PA —> +5.9% 

5. Knoxville, TN —> +5.8% 

6. Vineland, NJ —> +5.7% 

7. Lewiston, ME —> +5.7% 

8. Concord, NH —> +5.6% 

9. Bangor, ME —> +5.3% 

10. Muncie, IN —> +5.3%

Among the 400 largest U.S. housing markets, Zillow expects the weakest home price appreciation between October 2024 and October 2025 to occur in…

1. Lake Charles, LA —> -7.8%

2. Houma, LA —> -5.8%

3. Lafayette, LA —> -4.0% 

4. Johnstown, PA —> -3.9%

5. New Orleans, LA —> -3.8% 

6. Eureka, CA —> -3.4% 

7. Beaumont, TX —> -3.1% 

8. Odessa, TX —> -3.0% 

9. Shreveport, LA —> -2.9% 

10. Hammond, LA —> -2.9%

One quick take: I’m skeptical of Zillow’s home price forecasts for Florida, where active listings/months of supply have notably risen this year, which could suggest future pricing weakness.

This week, publicly traded homebuilder Lennar announced it entered into an agreement to acquire Rausch Coleman Homes, a homebuilder based in Fayetteville, Arkansas.

Lennar—which is active in 26 states—delivered 73,087 homes in fiscal year 2023.

Rausch Coleman Homes—which is active in 16 markets in Alabama, Arkansas, Florida, Kansas, Missouri, Oklahoma, and Texas—expects to complete 5,000 homes this calendar year.

Are you a real estate investor? Do you own rental property? 🏠

If so, you’re invited to participate in the Q4 LendingOne-ResiClub SFR Investor Survey.

The survey results will be published later this month in ResiClub—and in other mainstream media publications.