SANTA CLARA, Calif., June 13, 2022
Active listings will grow 15.0% year-over-year as the inventory recovery accelerates in 2H 2022; higher home sales prices (+6.6%) and mortgage rates (to 5.5%) add to affordability issues
SANTA CLARA, Calif., June 13, 2022 /PRNewswire/ -- As rising inflation and mortgage rates bring U.S. housing demand back from the 2021 frenzy, Realtor.com®'s newly-updated 2022 forecast predicts inventory will grow double-digits over 2021 and offer buyers a better-than-expected chance to find a home. Home sales will hit the second-highest level in 15 years, trailing only the 2021 pace, as rising incomes combined with higher housing costs continue to present a mixed bag of affordability issues.
The updated forecast anticipates a summer break from a feverish pace of home sales that will provide space for active listings to grow at a faster year-over-year pace than originally projected (+15.0% vs. +0.3%). Combined with returning seasonality and builders ramping up production, these trends could lead to a refresh of the housing market by as early as this fall.
"Financial conditions have shifted in a big way since the end of 2021 and the housing market is adjusting accordingly. As Americans grapple with higher prices for everyday expenses while today's buyers face housing costs that are up 50% from a year ago, recent home sales data shows some are taking a step back from the market," said Danielle Hale, Chief Economist for Realtor.com®. "Our updated 2022 forecast anticipates that demand will continue decelerating through the summer, providing breathing room for the inventory recovery to accelerate. As a result, this fall could be an opportune time to find a home – for both first-time and repeat buyers alike. Still, preparation will be key throughout 2022, as it continues to be a seller's market and asking prices remain high. For buyers who choose to wait until later in the year, take that time to assess your budget so you're set up with a strong financial footing whenever you're ready to move forward."
Realtor.com® 2022 Housing Forecast – Mid-Year Update
Metric (National full-year projections)
2022 Forecast – Updated
2022 Forecast – Original
to 5.5% (average: 5.0%)
3.6% (average: 3.3%)
Existing Home Sales
Existing Home Median Sales Price
Existing Home For-Sale Inventory
Single-Family Housing Starts
While Americans have faced a whirlwind of changes so far this year, a changing economic landscape is the biggest driver of updates to Realtor.com®'s 2022 housing forecast. Inflation has made a more significant and long-standing impact on real estate markets than was anticipated six months ago, and is reflected in trends like rapidly-climbing mortgage rates. Combined with record-high home listing prices and rents, home shoppers are feeling the strain on their budgets. As a result, buyer demand has been softening this Spring from its early 2022 surge.
Higher costs will continue to challenge 2022 buyers, as mortgage rates have already far surpassed Realtor.com®'s earlier prediction of 3.6% and home sale price growth year-over-year is expected to more than double its originally-forecasted pace (+6.6% vs. 2.9%). At the same time, Realtor.com®'s updated projection for year-end 2022 mortgage rates (5.5%) anticipates that rates have largely adjusted for the bulk of expected 2022 Fed hikes.
The rapid shifts in the economic landscape have some silver linings when it comes to housing affordability. With the unemployment rate near 50-year lows, employers are feeling the pressure to compete for talent, driving wage growth upwards from earlier year-over-year predictions (+3.8% vs. +3.3%). The competitive labor market may also give some buyers more negotiating power on workplace flexibility, creating more opportunities to relocate to relatively affordable housing markets. In fact, data from the first quarter of 2022 showed that 40.5% of Realtor.com® home shoppers viewed listings located outside of their current state, up from 33.4% in 2020.
Overall, the updated 2022 forecast reflects a housing market that is charting a path toward more sustainability, relative to the past two years of ups and downs. Home sales are still projected to hit a near record-high pace in 2022 despite trailing 2021 levels (-6.7%) and their original forecast (+6.6%), while the projected homeownership rate will hold roughly steady (65.6% vs. 65.8%). For many Americans, housing affordability will remain a significant obstacle as demand continues to outmatch supply, although by a smaller margin than in recent years. Buyers struggling with higher housing costs can find resources via sites like Realtor.com®, including its down payment assistance tool.
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago, and today through its website and mobile apps offers a marketplace where people can learn about their options, trust in the transparency of information provided to them, and get services and resources that are personalized to their needs. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
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