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Guide To 2022 Housing Market Predictions And Forecasts

Melissa Brock3-minute read

December 16, 2021

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There are no ifs, ands or buts: 2021 was an interesting year for real estate. The pandemic helped to create one of the most competitive housing markets in recent U.S. history. Home prices catapulted toward gigantic highs and dwarfed the housing market predictions in 2021, forecasted in 2020, which were originally thought to still feel some dead weight due to COVID-19.

 

Will buying a house in 2022 be smooth sailing for Americans? Despite eye-popping sales in certain parts of the country, it will start to pivot from a seller's market. In fact, first-time home shoppers will start to see the tide shift in their favor in 2022.

Keep tabs on the trends that will continue to evolve so you can navigate a changing market. By doing so, you can lock down on the best opportunity to purchase a new home next year.

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Predicted Real Estate Trends For 2022

In this section, we'll walk through several real estate trends to expect for 2022, including mortgage rates, home prices, home values and more.

Mortgage Rates

Mortgage rates are likely to continue to rise going into the new year. Last year, experts predicted that average interest rates would break the 3% range in 2021, but not rise much higher than 3.1% – 3.3%. However, the 30-year fixed-rate mortgage interest rate has only gone up 0.3% between January and November, according to Freddie Mac.

Rates may see 3.5% by the end of 2022, says Freddie Mac. The National Association of REALTORS® puts the number at 2.7%. However, they'll remain relatively low compared to other interest rate crests in past years.

This is good news for prospective home buyers worried about housing prices and rising rates. While mortgage rates are unlikely to change drastically or quickly, it’s always good to keep an eye out and plan strategically, even if rates are relatively consistent.

Home Prices

Low mortgage rates, supply shortages and the work-from-home trend will encourage home sales but will likely egg on higher prices in 2022. However, the price trend will be more moderate compared to housing market predictions in 2021. The median home sales price is predicted to rise 2.9% in 2022, according to Realtor.com.

  • Supply shortages: Construction of new homes has been stymied by supply chain and labor shortages. In the past, new home construction has helped regulate the demand for homes. However, home prices may continue to climb as a result of these shortages.
  • Work-from-home trends: Continued interest in remote work will drive up real estate costs in more favorable areas of the country. According to Realtor.com, one in five homeowners will look to move to the suburbs because they no longer need to situate themselves close to their jobs in a city center.

Home price growth means that home buyers will need to make sure they can afford the homes they plan to buy, particularly in certain pockets of the country. Prospective home buyers may want to use mortgage calculators to determine home price affordability in advance and also potentially save more for a down payment.

Home Values

Home value is different from home price – home value refers to the amount a buyer is willing to pay to purchase a home. It's sometimes called the "current market value."

What will happen to home values in 2022? Bidding wars changed home values in 2021 because real estate-hungry buyers were willing to pay more for homes than homeowners' asking price.

According to data from our friends at Rocket HomesSM, 1, home values were up 10.74% from January 2020 to the same time in 2021. From January to November this year, prices are up 17.48%. Similarly, home values should continue to rise in 2022.

Millennials Will Drive The Housing Market Upward

More than 45 million Millennials, who fall between ages 26 – 35, will plan to buy their first homes in 2022, according to the 2022 Housing Forecast from Realtor.com.  Despite the increase in the number of available homes, demand from millennial buyers may keep prices higher.

The Bottom Line

Based on forecasts, the housing market will change in 2022.

Mortgage rates, home prices and home value will rise, albeit slowly. Though many aspects of the housing market will experience a slowdown, home price appreciation will occur. As more homeowners list their homes for sale in 2022, these homes may remain on the market for longer periods of time. Even so, buyers will need to act quickly because the housing market is still a seller's market due to the demand that still outpaces supply.

Ready to buy a home in this ever-changing market? Contact Rocket Mortgage® today to speak to an expert.

1 Rocket Homes℠ is a registered trademark licensed to Rocket Homes Real Estate LLC. The Rocket Homes℠ logo is a service mark licensed to Rocket Homes Real Estate LLC. Rocket Homes Real Estate LLC fully supports the principles of the Fair Housing Act.

For Rocket Homes Real Estate LLC license numbers, visit RocketHomes.com/license-numbers.

California DRE #01804478

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Melissa Brock

The Rocket Mortgage Learning Center is dedicated to bringing you articles on home buying, loan types, mortgage basics and refinancing. We also offer calculators to determine home affordability, home equity, monthly mortgage payments and the benefit of refinancing. No matter where you are in the home buying and financing process, Rocket Mortgage has the articles and resources you can rely on.