Zillow now expects 4.2 million home sales to occur in 2023, down slightly from last month’s projection of 4.4 million, which would represent a 17% decline from 2022. Zillow’s forecast for existing home sales this year was revised downward, for essentially the same reasons. Newly pending sales – a measure of homes that went under contract – in May rose at a stronger rate than the market tends to see this time of year, even as mortgage rates remain elevated, presenting affordability challenges for many.

Despite the limited options, buyers remain eager to snap up homes at a decent rate. The shortage, and a persistent trickle of new listings entering the market, spurred the fastest month-over-month home value appreciation in nearly a year. The number of active for-sale listings in May was the lowest for that month in our records’ history, which dates back to 2018. Tight inventory conditions were the primary driver of the upward revision. Typical home values are predicted to rise 5.8% from May 2023 through May 2024.

That’s an upward revision from last month’s forecast, which called for 3.9% growth in 2023. Zillow forecasts the national Zillow Home Value Index (ZHVI) to end 2023 5% above where it began the year. Zillow’s expectation for the nation’s typical home value was revised upward again this month.

Zillow forecasts 4.2 million existing home sales in 2023, a 17% decline from 2022.

Low inventory continues to push upward on prices and appreciation expectations. Zillow’s latest forecast calls for home values to grow 5% in 2023.

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