Zillow predicts volatile, but overall declining mortgage rates in 2025, with modest growth in both sales and home-price appreciation.

The latest forecast from the online real estate services company expects home sales to rise slightly next year to 4.16 million units, up from an estimated 4.06 million this year. Home values will tick up 2.2% by the end of 2025, slightly below the annual home appreciation of 2.3% observed in November of this year.

Zillow predicts that a growing number of market measures will come closer to historic norms next year. While the number of new home listings remains 14% below pre-pandemic levels, current totals are still up from earlier in the year. Total for-sale inventory is 26.3% below the norms seen in 2018 and 2019, but it is still at its highest level since September 2020. Those levels are expected to continue moderating next year, but that progress depends on the future direction of interest rates.

Homebuyers looking for deals might want to shop for homes during the winter months, when there is less competition and more of a chance for discounts. Zillow’s market heat index shows competition for homes fell in 36 of 50 major U.S. metro areas between October and November this year. The share of homes that sold for more than list price was below 28% in October, part of a downward trend that began in July.

Zillow found that the typical U.S. home value in November reached $358,768. The typical monthly mortgage payment, assuming 20% down, was $1,865. That number was down 3.8% from 2023, but 111.2% higher than before the pandemic.

Of the 50 largest metro areas in the country, San Jose was the only city that saw home values rise month over month, with an uptick of 0.3%. Home values fell month over month in 47 major metro areas, and two cities — Salt Lake City and Louisville, Kentucky — held steady. The largest monthly decreases were seen in Austin, where values fell 1.1%; Tampa was down 0.9%; and both San Antonio and Dallas fell 0.8%.

Over the past 12 months, home values were up in 42 of the 50 largest metro areas. The highest annual increases were in San Jose, which was up 7.5%; New York, up 7%; Providence, Rhode Island, and Hartford, Connecticut, both saw home values increase 6.7%.

Of the seven metro areas that experienced annual decreases in home values, the largest drop was in Austin, which saw homes fall 3.4%. San Antonio experienced a 2.4% drop, while both Tampa and New Orleans decreased 1.9% and Jacksonville dropped 0.7%.