Realtor.com's updated 2022 forecast predicts inventory will grow double-digits over 2021, offering buyers an increased chance to find a home. Home sales will hit the second-highest level in 15 years.
Rising incomes coupled with high housing prices, which are up over 6%, and mortgage rates, which are up 5.5%, will cause buyers to experience affordability issues.
The update anticipates a break during the summer from a rapid pace of home sales, which will eventually provide space for active listings to grow at a faster year-over-year pace than originally projected.
"Financial conditions have shifted in a big way since the end of 2021 and the housing market is adjusting accordingly. As Americans grapple with higher prices for everyday expenses while today's buyers face housing costs that are up 50% from a year ago, recent home sales data shows some are taking a step back from the market," Danielle Hale, Chief Economist for Realtor.com said.
Hale reiterated that the 2022 forecast anticipates decelerating house demand through the summer, providing breathing room for the inventory recovery to accelerate. Hale predicts that the fall months could be an opportune time to find a home – for both first-time and repeat buyers.
The changing economic landscape around housing is attributed to rising inflation rates, which are higher than what Realtor.com predicted at the beginning of the year.
Other takeaways:
- Higher costs will continue to challenge 2022 buyers, as mortgage rates have already far surpassed Realtor.com's earlier prediction of 3.6% and home sale price growth year-over-year is expected to more than double its original pace
- At the same time, Realtor.com's updated projection for year-end 2022 mortgage rates anticipates that rates have largely adjusted for the bulk of expected 2022 Fed hikes.
- Home sales are still projected to hit a near record-high pace in 2022 despite trailing 2021 levels, while the projected homeownership rate will hold roughly steady.
