Home values are expected to climb 2.6% this year and 2.8% by the end of 2025, while rent appreciation should slow from its current pace through next year, according to Zillow’s latest home value and sales forecast.

Despite a gloomier outlook on interest rates in recent weeks, Zillow economists continue to expect home appreciation to hold firm in the coming months, mainly due to expected improvements in home sales activity. Existing home sales are expected to gradually increase in 2025, with estimated sales of 4.3 million homes by the end of next year, a jump of 7.5% from this year’s sales estimates of 4 million homes. The forecast is also an increase from the 4.1 million homes that were sold in 2023.

“Opposing forces are working to keep home values climbing, but only at a modest pace,” according to the forecast. “Inventory remains very low by historical standards, which, paired with expectations for declining mortgage rates and modest improvement in other leading indicators of home sales, is helping to buoy home value appreciation. At the same time, modest increases in new for-sale listings and persistently high mortgage rates are combining to limit price growth.”

Single-family rents increased by 4.3% in October year over year, but should slow to 4.1% by the end of 2024, before slowing even further next year to 3.3%. Multifamily rents were up 2.3% in October, but Zillow expects rent growth to slow to 1.4% by the end of this year and inch up by a mere 1.2% in all of 2025.