The majority of a Zillow expert panel predicts a buyer’s market in 2023. 

With the Federal Reserve still battling inflation and mortgage rates hovering around 7%, home shoppers are seeing a drop in competition, partly because many buyers have been priced out of the market. 


Over the next 12 months, the majority of economists and housing market experts polled in the Zillow Home Price Expectations Survey (ZHPE) also expect rent growth to exceed inflation and top home price growth as sidelined potential buyers bide their time as renters.

Affordability issues slow growth in housing prices

During the pandemic, home values hit record highs. But with the meteoric rise of housing prices, combined with quickly rising mortgage rates, housing affordability has become a significant issue for buyers nationwide. 

With mortgage rates driving up the cost of monthly mortgage payments, qualified borrowers are still faced with housing costs substantially more than what they would have paid early in 2022. 

The drop in buyer demand has taken a toll on housing prices, with the typical home values dipping slightly across the U.S. and more steeply in some of the pricier metros, along with those that saw explosive growth during the pandemic. 

Though the predicted home price appreciation rate in the Zillow survey increased to 9.8% from 9.3%, all 107 respondents expect deceleration in the coming year. 

The share of Zillow panelists who thought their long-term outlook on the housing market might be overly optimistic rose to 67% from 56% last quarter. 

Inventory and days on market still below pre-pandemic levels

With home price growth poised to decelerate, Zillow’s latest market report showed listings’ typical days on market has recently increased but is still 11 days fewer than in 2019. 

Housing inventory has also increased but is still down nearly 42% compared to 2019. 

The majority of the Zillow panel (56%) predicts a shift in buyers’ favor by sometime in 2023, with another 24% predicting that shift in 2024, 13% pointing to 2025, and 8% not expecting it until after 2025. 

A new kind of buyer’s market

Buyers who can still afford home ownership have regained considerable leverage in 2022, but we’re still in the early stages of the shift to a more balanced market. 

The coming year could bring a new kind of buyer’s real estate market to many U.S. metros. 

Historically, “buyer’s market” has been defined as one where supply exceeds demand — i.e., when the number of homes for sale is greater than the number of buyers actively shopping for homes. 

With inventory still low compared to 2019 levels, that’s not likely to happen in 2023, which may be why some panelists expect the shift to a buyer’s market to come later. It’ll take more than a few months to turn the supply shortage into a surplus. 

Before that happens, buyers will gain increasingly more negotiating power, which, combined with the market cool-down spreading across the country, skews the market in their favor. 

So, maybe it’s time for a new, broader definition of a buyer’s market—one that takes the supply factor out of the equation and focuses instead on negotiating power. 

Rent growth projected to exceed growth in housing prices

Home shoppers sidelined by rising mortgage rates are increasing the demand for rental properties. And with rents going up, renters hoping to buy a home will find it more challenging to save up for the down payment. 

Experts on the Zillow panel expect rent growth to outpace the growth of inflation, stocks, and home values over the next 12 months. 


Panelists predict an average rent growth rate of 5.4% for 2023, compared to the 8.6% expected by the end of 2022. While growth is expected to slow next year, it’s still higher than the annual growth rate of just under 4% for the years before the COVID pandemic. 

Meanwhile, the uptick in demand for rentals, combined with declining home purchases, has motivated builders to ramp up construction on multi-family units, pushing starts to their highest level in years. 

Assuming overall inflation cools, Zillow’s panel expects stock prices to rebound over the next three years, topping the growth of both home prices and rents. 

Midwest and South least likely to see declines in home prices

According to survey respondents, relatively inexpensive Midwest markets—like Columbus, Indianapolis, and Minneapolis—are the least likely to experience declines in home prices over the next 12 months. Just 36% predict declines from current levels during that time. 

Fast-growing markets in the South—like Atlanta, Charlotte, and Nashville—are also unlikely to see declines in home prices, with only 44% of survey respondents expecting price drops. 

Markets projected to cool the fastest

Over three-quarters (77%) of respondents expect declines in markets that saw the most explosive growth during the pandemic—like Boise, Raleigh, and Austin. 

Suburban and exurban areas are unlikely to see widespread declines in home prices, while urban areas and vacation hotspots are most likely to see them. 

Top takeaways for real estate agents

Whatever’s happening in your local market, keep relevant data like this on hand to share with your clients and prospects. 

Use the resources at your disposal to educate yourself and your community, including those currently renting. 

Give them a reason to call you first when they’re ready to buy a home.