Some changes are expected in the housing market in the coming year, but not all changes are negative. For buyers frustrated with the lack of homes for sale and the overwhelming competition for homes, some relief may be on the way. In addition, while mortgage rates and house prices are not expected to fall, they are expected to stabilize somewhat. That too may bring some relief to buyers who have struggled to stay ahead of price hikes and rising rates.
Realtor.com has updated its 2022 housing market forecast to find that calmer waters may emerge as demand cools and supply increases. The new forecast anticipates:
· Mortgage rates will average 5 percent in 2022 and rise to 5.5 percent by the end of the year. This compares with an original forecast of 3.3 percent on average and an increase to 3.6 percent.
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· Buyer demand is expected to cool during the summer, but most markets will continue to favor sellers.
· Housing supply is expected to grow by 15 percent this year compared to 2021. The original forecast was that the stock of homes for sale would increase by just 0.3 percent year-on-year.
Median home prices are expected to rise 6.6 percent year-on-year in 2022 compared to last year, which is much less than the double-digit increase seen this year, but well above the original forecast of a 2 rise .9 percent.
· A near-record home sale is expected for 2022, which will only lag behind the number of homes sold in 2021. Still, the new forecast for 2022 is 6.7 percent less sales. Realtor.com’s original forecast was for a sales increase of 6.6 percent compared to 2021.
The forecast remains the same for the start of single-family homes, which indicate when construction of new homes will start, with a 5 percent increase in 2022 compared to 2021.
Home buyers continue to look for homes out of state, study says
While higher mortgage rates and continued price increases for homes will push some buyers out of the market, those who can expand their monthly housing budget, raise their down payment or find a cheaper home will find some breathing room over the next six months.
Wage growth and low unemployment are positive aspects of the economic landscape, and Danielle Hale, chief economist at Realtor.com, suggests that competition for workers could make it easier for people to find more flexible opportunities to relocate or work remotely from cheaper housing markets. . Realtor.com data shows that in the first quarter of 2022, 40.5 percent of buyers were looking for properties outside their state, up from 33.4 percent in the first quarter of 2021.
For the full report, visit realtor.com/research/2022-national-housing-forecast-midyear-update.