2022 Housing Market Forecast

According to Realtor.com's chief economist, 2022 will be a whirlwind for the housing market. Home sales are expected to increase another 6.6% and home prices to rise another 2.9%. Millennial's aged 26-35 continue to lead the demand for homes, keeping the market fast-paced and competitive, with Gen Z'ers close behind. Renters are predicted to see a 7.1% increase in prices, leading many to evaluate the benefits of home ownership.

Affordability will continue to be a challenge, with increasing interest rates and prices. Studies show that declining affordability inhibits migration and thus slows job growth because qualified workers cannot move to where the jobs are.

Interest rates are predicted to hit close to 4.0% by the end of 2022, but home sales will not suffer, thanks to job gains, investor demand and work-from-home flexibility. We expect a slower growth rate for home building in 2022, but the level of single-family housing starts will be about 25% higher than it was in 2019. Construction costs are up 19% year-over-year and that, combined with a significant labor shortage, will contribute to the decline in housing affordability.

Nationwide, experts are suspecting that the market will stay in favor of sellers closer to five years rather than the three years originally predicted. Buyers will continue to experience low inventory and will need to be patient and have a plan.