Zillow changes course on home prices: Updated forecast for 400 housing markets

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This week, Zillow economists published their updated 12-month forecast, projecting that U.S. home prices—as measured by the Zillow Home Value Index—will rise 0.4% between July 2025 and July 2026.

Heading into 2025, Zillow’s 12-month forecast for U.S. home prices was +2.6%. However, many housing markets across the country softened faster than expected, prompting Zillow to issue several downward revisions. By April 2025, Zillow had cut its 12-month national home price outlook to -1.7%.

However, in recent months, Zillow has stopped issuing downward revisions—and this revised 12-month outlook of +0.4% actually represents an upward adjustment.

“Home value appreciation is nearly flat at the national average, rising just +0.2% over the past year. Lower rates and low price growth have slightly improved affordability; monthly mortgage costs are down $19 over the past year, but the typical payment is still nearly $1,000 per month higher than before the pandemic,” wrote Zillow economists this week.

Zillow added that: “Affordability and access is gradually improving where builders have been able to keep up with demand, showing why building more homes is so critical. Metros where price corrections are steepest are among those with the largest increase in inventory compared to before the pandemic. All of these metros except Miami rank among the top 10 for home building permits from 2020 to 2024. When demand for homes surged, builders were able to respond fastest in areas with fewer land-use restrictions. That gave buyers more options and sellers more homes to move into, freeing up existing supply.”

Among the 300 largest U.S. metro area housing markets, Zillow expects the biggest home price increase between July 2025 and July 2026 to occur in these 15 areas:

1. Atlantic City, NJ → 4.3%
2. Torrington, CT → 4.1%
3. Saginaw, MI → 3.8%
4. Kingston, NY → 3.8%
5. Pottsville, PA → 3.8%
6. Rockford, IL → 3.6%
7. Concord, NH → 3.6%
8. Knoxville, TN → 3.4%
9. New Haven, CT → 3.4%
10. Norwich, CT → 3.4%
11. Hartford, CT → 3.2%
12. Fayetteville, AR → 3.1%
13. Hilton Head Island, SC → 3.0%
14. Vineland, NJ → 3.0%
15. Barnstable Town, MA → 2.9%

Among the 300 largest U.S. metro area housing markets, Zillow expects the biggest home price decline between July 2025 and July 2026 to occur in these 15 areas:

1. Houma, LA → -8.6%
2. Lake Charles, LA →  -8.2%
3. Alexandria, LA →  -6.6%
4. Lafayette, LA →  -6.2%
5. New Orleans, LA →  -5.8%
6. Shreveport, LA →  -5.7%
7. Beaumont, TX → -5.3%
8. San Francisco, CA →  -4.1%
9. Corpus Christi, TX →  -3.8%
10. Santa Rosa, CA →  -3.7%
11. Monroe, LA →  -3.7%
12. Odessa, TX →  -3.7%
13. Austin, TX →  -3.5%
14. Chico, CA →  -3.4%
15. Texarkana, TX →  -3.3%

Below is what the current year-over-year rate of home price growth looks like for single-family and condo home prices. The Sun Belt, in particular Southwest Florida, is currently the epicenter of housing market weakness right now.