Zillow May 2021-May 2022 Home Value & Sales Forecast

Zillow Research
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*Zillow expects home values to grow 14.9% between May 2021 and May 2022, and to end 2021 up 17.9% from December 2020.

*Existing home sales are expected to total 5.91 million in 2021, up 4.8% from 2020.

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The rapid home price appreciation that has marked the past year in housing is not expected to let up any time soon, though affordability concerns and continued low inventory are putting somewhat of a damper on the outlook for sales, according to the latest Zillow home value and sales forecasts.

Zillow economists expect home values to increase 6.1% over the next quarter (May-August), by 17.9% through the end of this year (December 2020-December 2021) and by 14.9% through the twelve months ending in May 2022. The latest forecast is an upward revision from last month, when we predicted 11.4% year-over-year growth in April 2022. This month's forecast was boosted, in part, by record short-term appreciation of the past few months, which shows virtually no signs of slowing as sky-high demand runs headlong into inadequate supply.

On the sales side, our forecast has been revised down somewhat, though we still expect that the number of existing homes sold in 2021 will ultimately exceed the number sold in 2020. The latest Zillow sales forecast calls for 1.64 million existing home sales in Q2 and a total of 5.91 million sales in 2021, up 4.8% from the 5.64 million total sales recorded in 2020 — which was itself the strongest year for existing home sales since 2006. Still, the full-year forecast is noticeably down from our prior forecast, which called for more than 6.2 million existing home sales this year. Pending sales figures and mortgage applications that have both fallen recently contributed to the lower outlook.

Ultimately, while demand for homes remains strong, limited supply is constraining sales activity — especially at lower price points, contributing to some affordability concerns. Even so, enduring demographic tailwinds, persistently low mortgage interest rates and an improving economy should continue to buoy demand, and recent signs of improved home seller sentiment suggest that some inventory relief could be on the way.

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