Next year forecast to present a "mixed bag" of affordability challenges and opportunities
Realtor.com has predicted that home sales will hit their highest level in 16 years in 2022, as buyers remain active and for-sale inventory begins to recover from steep declines.
According to Realtor.com’s housing forecast report, next year will present a “mixed bag” of housing affordability challenges and opportunities as listing prices, rents, and mortgage rates are all expected to climb while incomes rise.
“Whether the pandemic delayed plans or created new opportunities to make a move, Americans are poised for a whirlwind year of home buying in 2022,” said Danielle Hale, chief economist at Realtor.com. “With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth at a more sustainable pace than in 2021. Affordability will increasingly be a challenge as interest rates and prices rise, but remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise. And with more than 45 million millennials within the prime first-time buying ages of 26-35 heading into 2022, we expect the market to remain competitive.”
The report indicated that 2022 will be marked by buyers facing a competitive seller’s market, with record-high listing prices, fast-paced sales, and limited for-sale home options as existing-home listings continue to lag behind pre-COVID levels.
However, the good news is that the new construction supply gap of 5.2 million new homes may shrink somewhat in 2022 as builders continue to ramp up production with a projected increase of 5% year-over-year.
“Our housing forecast suggests that we’re in store for another dynamic year of activity, but 2022 will also come with growing pains as we navigate the path forward from the height of the pandemic toward a new normal,” said George Ratiu, manager of economic research at Realtor.com. “The bottom line for buyers is to make sure you’re comfortable with your timeline and budget – and especially for younger buyers making this massive financial decision for the first time. For sellers, take into account your local market conditions as well as the likely increase in the number of homes for sale, and price yours competitively.”