Real estate in the US has just experienced one of its busiest years. The past 12 months have been about ever-increasing prices, low mortgages and rock-bottom inventory levels. But what’s in store for the US housing market in 2022? Realtor.com has recently made its predictions and forecasts more of the same with some caveats.
US housing prices in 2022
Many metro areas have seen double-digit price growth over the last 12 months as the supply shortage has put upward pressure on the market. Realtor.com believe that price increases will start to slow down next year, but housing will continue to go up in value.
“Price growth is expected to move back towards a normal range,” said Danielle Hale, Chief Economist at Realtor.com. However, she points out that price increases will be “on top of recent high prices” and, as a result, “will still hit new highs”.
How much will US house prices rise in 2022? Realtor.com predicts 2.9%, a much more sedate pace than the average of 12% seen in 2021.
Supply on the US housing market in 2022
2021 has experienced a shortage of supply with inventory levels falling to minimum levels in many parts of the country. Florida is one example – in Q3, the level of single-family homes in the state stood at just 1.3 months.e
Realtor.com believes that the story will be similar in 2022 with minimal increases seen in most metro areas. The real estate portal points out that there will be no real additions to new-build stock either, particularly in the single-family home market. Starts in this sector are expected to go by a mere 5% next year.
Demand for US property in 2022
Rock-bottom interest rates indicate the solid demand currently in the market. And this upward pressure will only increase in 2022. According to Realtor.com, 45 million millennials (Americans aged 26-35) will enter homebuying years over the next 12 months. Consequently, the US housing market will need 45 million new households.
Sales of US real estate in 2022
Although sales slowed slightly at the end of 2021, the US housing market has had a busy year with record increases in many parts of the country. 2022 looks set to follow the same pattern as competition for the short supply remains high over the next 12 months.
How much will sales rise in 2022? Realtor.com predicts a 6.6% increase in transactions, the highest for 16 years.
US Mortgages in 2022
Mortgage interest rates have remained low throughout this year, but this tendency appears to be coming to an end. Hale forecasts that they will go up to reach an average of 3.3% over the next few months and end the year at 3.6%.
She emphasises that although the increase is small, it still translates to a big difference in monthly repayments. As a result, many would-be homebuyers may be priced out of the mortgage market and have to rent instead.
Rental rents in 2022
Lack of inventory in the resale market has led to an increase in the number of people looking for rental properties. And as a result, rental rates have mirrored house prices over the last year.
“Many aspiring homebuyers who keep losing bidding wars or can’t afford high home prices are stuck renting,” said Hale. “Plus, there are plenty of folks who moved in with family or split up with their partners during the pandemic and are now looking for their own rentals.”
How much will rental rates rise in 2022? Realtor.com believes that the increase will be around 7.1%.