Zillow CEO Warns of 'Lousy' US Housing Market Ahead
Persistent affordability challenges and a chronic lack of housing supply are set to prolong the market slowdown, according to Zillow's Rich Barton.
The U.S. housing market faces another challenging year, characterized by Zillow CEO Rich Barton as fundamentally 'lousy' due to a severe and ongoing affordability crisis. His downbeat assessment highlights a market caught between soaring home values and a persistent shortage of available properties, creating a difficult environment for buyers and signaling continued low transaction volumes for the real estate industry.
"The housing market is kind of lousy right now," Barton stated, pointing to a stark reality where home prices have surged between 30% and 100% since before the pandemic, far outstripping wage growth. This price explosion, coupled with elevated mortgage rates, has pushed homeownership out of reach for many Americans. Recent economic data supports this view, showing that the average monthly mortgage payment has consistently consumed more than 30% of a potential homebuyer's income since 2022, a significant strain on household finances.
The core of the problem is a dual crisis of affordability and supply. While mortgage rates have shown signs of easing from their peaks, they remain a substantial barrier. Forecasts for late 2025 suggested the 30-year fixed rate would hover in the mid-6% range, a level that continues to deter potential buyers and, critically, current homeowners.
This has created a gridlock effect, as existing homeowners with low mortgage rates secured in previous years are unwilling to sell and move, severely constraining the supply of available homes. "The root of this housing crisis... is really a supply shortage," Barton emphasized. While housing inventory has seen modest year-over-year gains, the market remains starved for new listings, a problem exacerbated by more than a decade of under-building following the 2008 financial crisis.
Despite the low sales volume, home prices have remained stubbornly high and are even projected to climb further, albeit modestly. According to a forecast from J.P. Morgan Research, home prices were expected to rise by approximately 3% through 2025. This resilience is fueled by the intense competition for the few homes that do come to market, as demographic tailwinds—such as a large cohort of millennials entering their prime home-buying years—sustain a baseline of demand.
Looking ahead, Barton is preparing Zillow for what he anticipates will be another slow year for the housing market. The outlook for real estate transaction volumes remains subdued, impacting the entire ecosystem of agents, lenders, and service providers. Any significant market revival hinges on a material improvement in affordability, which would require either a notable decline in mortgage rates—largely dependent on the Federal Reserve's future monetary policy—or a substantial increase in housing supply to better meet demand. Until then, the market appears set to remain a challenging landscape for all participants.