The US housing sector became a popular place despite the overall economic downturn caused by the Covid-19 pandemic, as cheap mortgage rates and the disruptions caused by the virus spurred people to shop for homes
Zillow sees home prices rising 3% this year GETTY IMAGES NORTH AMERICA / JOE RAEDLE

The most-visited real estate website in the U.S. has revised down its forecast for home price increases this year, citing growing inventory and interest rates that remain near the highest levels seen in more than 20 years.

Zillow estimates national home prices to rise by 3% in 2023, down from 3.3% in October and nearly half of the 5.8% estimated in August.

For the 12 months through October 2024, the website expects a decrease of 0.2% in prices. Last month, the expectation was for a 2.1% increase over 12 months.

"More homes on the market means less competition for each listing, one reason that Zillow's home value forecast was revised downward," the company's research team wrote in a statement.

Zillow estimates that existing home sales will drop 18% this year to 4.1 million, the same estimate of last month.

Last week, the National Association of Realtors said home sales fell 15% in October from a year earlier to an annual rate of 3.79 million.

The demand for home purchases can recover if mortgage rates continue to fall, Zillow said.

The average 30-year fixed rate dropped to 7.41% in the week ended Nov. 17 from 7.61% a week earlier, the Mortgage Bankers Association said on Nov. 22. It was the lowest level in two months.

The rate was close to 8% in mid-October, the highest since 2000.