Zillow Forecast for 2025 Predicts Bumpy Decline in Mortgage Rates

Posed December 24, 2024

Zillow’s 2025 forecast expects only about 100,000 more sales than in 2024, and mortgage rates are poised to remain slow and steady.

According to Zillow’s November market report, the latest forecast outlines slowly declining mortgage rates in 2025 which could result in growth in both sales and home price appreciation.

Home values are forecast to increase to 2.2% in 2025, following the 2.3% annual appreciation observed in November.

New home listings on the market are still nearly 14% lower than it was before the pandemic. An improvement over March’s 25% deficit. Additionally, new homebuyers could feel less pressure in 2025 as competition for homes cooled nationwide and in 36 of 50 major U.S. metro areas from October to November, according to Zillow.

The average price for a home in any U.S. major metropolitan area is $358,761, according to the Zillow Hoem Value Index.  In the Kansas City metro, the value of a home is $301,202, a 3.2 % increase in value year-over-year. 

“There’s a strong sense of déjà vu on tap for 2025,” Zillow Chief Economist Skylar Olsen said in a release. “We are once again expecting mortgage rates to get better gradually, and opportunities for buyers should follow, but be prepared for plenty of bumps on that path. Those shopping this winter have plenty of time to choose and a relatively strong position in negotiations.”