Housing Market Predictions 2022

Wed May 4 2022

A young family of three stand outside, facing their new home. The father points towards the home.

Anyone who went house hunting last year knows what it’s like to deal with a seller’s market. The combination of low interest rates and low housing inventory pushed demand up and the competition for available homes fierce. Will that pattern continue? We looked at experts’ housing market predictions for 2022 to see what’s in store.

It’s Still a Seller’s Market

Early housing market predictions from economists indicated that 2022 would continue to be a seller’s market, although not at the pace we saw in 2021. In January, Chief Economist Lawrence Yun from the National Association of Realtors (NAR) predicted home sales would decline slightly, but stay above pre-pandemic numbers. Experts at Zillow made similar predictions , saying certain metrics would stick, namely low housing inventory, high demand, and low mortgage rates.

Housing Inventory Will See Modest Growth

The supply chain issues that push up prices at the gas pump also impact the cost of building materials, as shown by last year’s skyrocketing lumber costs. According to Robert Dietz, chief economist for the National Association of Home Builders (NAHB), problems with the supply chain, and therefore inflation and the pace of construction, will continue into 2022 .

Looking at these supply chain issues next to significant labor shortages in the construction industry led Dietz to predict limited growth in single-family home production this year. However, multi-family home starts may help pick up the slack for an overall increase of 2.5 percent.

Mike Gregor of the Cohen Agency thinks he’s already seen some growth in the housing supply. “Real estate market sale listings have been increasing for five consecutive months.” This could ease the competition for each home down even though the market as a whole benefits sellers.

Mortgage Rates Will Continue to Rise

Low mortgage rates, averaging 2.65 percent for a 30-year mortgage, were a major factor in 2021’s hot real estate market. So when most Federal Reserve members predicted at least three interest rate hikes back in December, economists factored that into their housing market predictions for 2022, saying rising mortgage rates would put a damper on sales.

You may have not noticed any difference if you were looking to purchase a home in the first few months of 2022. That’s partly because many people dove into the market hoping to buy before mortgage rates started going up. As of April 14, 2021, the average for a 30-year fixed mortgage was 5 percent . That may not be a historic low, but it’s still much better than previous years.

Experts still predict that mortgage rates will continue to rise, and that impacts the overall cost of a home. As Patrick O’Sullivan, the owner of Get MULTIfamily , explains, “The higher our mortgage rates, the higher your overall mortgage payments. That means higher monthly costs for you.”

Buying a House in 2022

When you look at housing market predictions for 2022, the year looks like a mixed bag. Sellers still have the upper hand, but experts anticipate some of the pressures that push prices higher will ease ﹘ but slowly, and maybe not until 2023.

That said, if a new home is part of your 2022 plans, then you’re going to want to keep a close eye on the markets where you hope to buy. You may have fewer options to choose from, so you’ll want to move quickly when you find a home that meets your needs. Pay attention to mortgage rates too. Most experts expect them to keep going up, which is another reason you may need to move quickly.

Perhaps the most important tip for buying a house in a seller’s market is to think carefully about your budget. Offers above the asking price may be the norm for a while longer, and new homebuyers are often surprised by the additional costs, such as home insurance, appraisal fees, and property taxes.

Get more budgeting tips in our article “13 Ways to Afford a House.”