What To Expect From a 2022 Housing Market

After a year of major price increases and tough competition for homebuyers, economists expect another hot market in 2022, NerdWallet reports. Though home prices will continue to rise, they may grow at a slower pace than in 2021 as more potential buyers are priced out and demand weakens. 

Affordable homes will likely remain hard to find, but current homeowners will continue to see a boost in equity thanks to increases in home values. Inventory will be low throughout 2022, so sellers will have the upper hand yet again, but as demand drops, more buyers could have a chance to finally snag their homes.

After hitting a record low of 2.66% at the tail end of 2020, interest rates on 30-year, fixed-rate mortgages did rise at the start of 2021, but then hovered below 3% for much of the year. While we're unlikely to see sub-3% rates again anytime soon, major forecasters aren't predicting huge increases for 2022.

On the high side, the Mortgage Bankers Association predicts rates will hit 4% by 2022's end. On the low end, Fannie Mae expects the 30-year fixed to average 3.4% at the end of the year. Those two organizations, plus Freddie Mac and the National Association of Realtors, predict that rates will rise steadily through 2022. When you take the average of all four groups' quarter-by-quarter predictions, you have the 30-year fixed averaging 3.33% in the first quarter and 3.7% in the fourth quarter.

Median existing home prices experienced double-digit year-over-year increases throughout 2021, according to NAR data. And the highest median price — $362,800 in June 2021 — was nearly $60,000 over the median price in January 2021. September, the most recent month for which data is available, continued a late-summer trend of less heady increases, and forecasters project slower price growth will continue into 2022.

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