2022 Housing Market Research & Predictions from Realtor.com
Americans will have a better chance to find a home in 2022, but will face a competitive seller's market as first-time buyer demand outmatches the inventory recovery. Additionally, with listing prices, rents and mortgage rates all expected to climb while incomes rise, 2022 will present a mixed bag of housing affordability challenges and opportunities.
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. With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth.
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.
Summary
Home Sales: Hit 16-year Highs
At a national level, this means Realtor.com expects to see continued home sales growth in 2022 of 6.6% which will mean 16-year highs for sales nationwide and in many metro areas. With more than 45 million millennials in the prime first-time home buying ages of 26 to 35 in 2022, demand for housing is expected to remain strong.
Home Prices: Advance at a More Moderate Pace, but Continue to Set Records
Looking ahead, with economic growth expected to sustain the purchasing power of eager homebuyers, Realtor.com expects the median home sales price to continue to increase, rising 2.9% in 2022, a notably more moderate pace. As builders ramp up production to meet demand, home buyers will grapple with higher monthly costs due to rising prices and rising mortgage rates.
For-Sale Inventory: Begins to Turn Around
With homes selling and continuing to do so quickly, inventory will remain limited, but Realtor.com expects to see the market rebound from 2021 lows. Inventory is expected to grow 0.3% on average in 2022.
Rents: Expected to Outpace Home Price Growth
At a national level, Realtor.com forecasts rent growth of 7.1% in the next 12 months, somewhat ahead of home price growth as rents continue to rebound from slower growth earlier in the pandemic.
Key 2022 Housing Trends & Demographics
Still Preferring the Suburbs
With affordability likely to be even more top of mind for buyers in the face of rising home prices and rising mortgage rates, the suburbs are likely to maintain their recent cachet.
Remote, In-Office, or Hybrid? The Future of Work Brings Flexibility for Workers
In addition to affordability, one of the reasons suburbs are likely to remain popular is increased workplace flexibility. Many companies shifted to remote work during the pandemic out of necessity, and this period has demonstrated that work is possible in a remote environment. Additionally, surveys show that many workers prefer working remotely, at least several days per week.
Searchers Dream Big, but Budget Realities and For-Sale Availability Might Mean Smaller Homes Prevail
With the suburbs still popular and at least occasional remote work likely an option, homebuyers are likely to continue to prefer larger homes that provide space for working at home from time to time as well as versatility. At the same time, rising affordability challenges may cause some homebuyers to decide to sacrifice space to make a home purchase work with their budget.
Hispanic Homebuyers Are A Growing Demographic
Hispanic homebuyers are already a sizable share of the housing market, comprising more than 1 in 10 recent homebuyers, yet still under-represented relative to their roughly 1 in 5 share of the U.S. population.
First-time Homebuyers Face an Uphill Journey
First-time homebuyers will need to be successful in the 2022 housing market if we are going to see the homeownership rate begin to climb again. In many respects it will be an uphill journey given the slightly better but still-limited for-sale inventory environment, high and rising prices, and rising mortgage rates all pushing monthly costs higher.
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