Today’s mortgage rates remain stable, but Zillow’s latest housing market outlook signals a shift: U.S. home prices may rise slightly over the next year — after months of decline.
Current mortgage rates as of September 29
Zillow Home Loans reports these national averages:
- 30-Year Fixed: 6.125% (APR 6.299%)
- 15-Year Fixed: 5.500% (APR 5.784%)
- 30-Year FHA: 5.875% (APR 6.557%)
- 30-Year VA: 6.000% (APR 6.303%)
- 7-Year ARM: 6.25% (variable)
Rates have dropped slightly from last year’s highs, and monthly mortgage payments are down by about $19 year-over-year. But the typical payment still costs nearly $1,000 more per month than it did before the pandemic.
Zillow’s new forecast: Home prices to rise 0.4%
Zillow economists now predict home prices will increase 0.4% from July 2025 to July 2026, as measured by the Zillow Home Value Index. This marks a turnaround from their earlier projection of a 1.7% drop.
Zillow had revised forecasts downward for most of 2025, citing faster-than-expected cooling in many markets. But new data shows pricing may stabilize—and even tick up slightly.
“Affordability and access is gradually improving where builders have been able to keep up with demand,” Zillow said. “More homes give buyers better choices and increase inventory for sellers looking to move.”
Markets seeing the biggest home price gains
Zillow expects the strongest home price growth in smaller metro areas with rising inventory and active construction. These 15 metros lead the forecast:
- Atlantic City, NJ → +4.3%
- Torrington, CT → +4.1%
- Saginaw, MI → +3.8%
- Kingston, NY → +3.8%
- Pottsville, PA → +3.8%
- Rockford, IL → +3.6%
- Concord, NH → +3.6%
- Knoxville, TN → +3.4%
- New Haven, CT → +3.4%
- Norwich, CT → +3.4%
- Hartford, CT → +3.2%
- Fayetteville, AR → +3.1%
- Hilton Head Island, SC → +3.0%
- Vineland, NJ → +3.0%
- Barnstable Town, MA → +2.9%
Where prices could fall the most
Zillow forecasts declines in several Louisiana, Texas, and California markets, led by:
- Houma, LA → -8.6%
- Lake Charles, LA → -8.2%
- Alexandria, LA → -6.6%
- San Francisco, CA → -4.1%
- Austin, TX → -3.5%
Many of these metros saw steep pandemic-era gains and now face corrections amid rising inventory and affordability concerns.
How to lower your mortgage rate
If you’re buying now, you can still improve your mortgage rate by:
- Boosting your credit score: A higher score qualifies you for better offers
- Making a bigger down payment: Lowers your loan-to-value ratio
- Reducing debt: A lower debt-to-income ratio makes you a stronger applicant
Zillow also offers a BuyAbility tool that lets you personalize your rate estimate based on income, location, and credit score.
Should you lock in your rate now or wait?
Experts remain split. While rates remain above 6%, inflation and Fed policy could still influence late-2025 mortgage trends. If you’re shopping now and qualify for a favorable offer, locking in may offer peace of mind.
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