The Federal Reserve is preparing to increase mortgage rates to tame elevated inflation, but higher rates still won’t be enough to stop another year of strong price growth in the housing market, Fortune says. Bank of America predicts that home prices across the U.S. will rise another 10% by the end of 2022, nearly double the average home price growth posted since 1989.
Some deceleration could occur as more buyers are priced out, but shifting preferences due to remote work as well as a nationwide supply deficit could put upward pressure on home prices into the start of 2023.
Why the bullish 2022 outlook? While climbing mortgage rates could pour some cold water on the housing market over the long term, Bank of America says it could increase buyer urgency—as they rush to lock in rates—in the short term. Rising household incomes, favorable demographics, and "shifting preferences due to remote work" should also put upward pressure on price growth, writes Bank of America. That demand is something the supply side of the market—which is still hovering four-decade lows for housing inventory—simply can't handle.
Advertisement
Related Stories
New-Home Sales
Mortgage Rates Are Up but New-Home Sales Still Solid in March
Lack of existing home inventory drove a rise in new-home sales, despite higher interest rates in March
Labor + Trade Relations
Who's Earning What in Construction
Workers in construction management roles may earn a higher median wage, but on average, lower-paid occupations have experienced somewhat faster wage growth
Build to Rent
Build-to-Rent Is Booming, Particularly in These Metros
A recent report finds that the Phoenix metro leads with more than 4,000 build-to-rent units completed in 2023, and Texas is the leading state for build-to-rent development
