Home Prices – What Does the Housing Market Look Like From Here?
What does the housing market forecast look like as we head into the second half of 2022? Between the pandemic and uncertain economic conditions, a lot of the past few years has been unpredictable. Now, with housing prices and interest rates steadily climbing, experts are making predictions about where things are headed.
Housing Prices Continue Slow Rise
Housing prices went up at unprecedented rates between 2020 and 2022. This was attributed mainly to housing shortages, creating demand and competition, and a surge of employees beginning to work at home. No longer having to commute to work opened up more possibilities, allowing work at home employees to consider homes outside of the city.
While prices are still currently going up, it has slowed down. In June, the national median list price for a single-family home was $450,000. That price is a 16.9% increase from last year and up more than 31% from the same time in 2020.
Most experts predict that this will level out by the end of the year. Combined with more homes available, more potential buyers may find themselves able to seriously consider home ownership.
New Housing Inventory
There is expected to be an increase of available homes as the year churns on. There is a focus on brand new housing being built to meet demand. At the same time, home owners who gained equity with the rising market value are now looking to cash in. Some economists predict a rise in for-sale housing inventory from 0.3% at the beginning of 2022 to 15% by the end of the year. This could potentially slow the rise of home prices as buyers see more options.
Housing Market Interest Rates Leveling Out
Interest rates rose slower than predicted throughout 2021, not going much higher than 3.3%. This year has been different, seeing the average 30 year fixed mortgage rate hit an average of 5.51% as of July 2022. Those numbers are expected to level out and fall back down to 4.6% according to the Freddie Mac quarterly report. This is good news for prospective buyers concerned about both high housing prices and interest rates. Lower rates may give them the push they need to start the home buying process.
The Housing Market and Millennials
Millennials are playing a big role in driving housing demand. According to Realtor.com, it is predicted that more than 45 million millennials will plan to buy their first homes in 2022. First-time buyers may qualify for special assistance including government-backed VA loans and FHA loans.
Housing prices and interest rates are both expected to level out near the end of 2022. While increased inventory may eventually begin to tip things, current demand makes it likely that it will remain a seller’s market going into 2023. Current competition means that sellers should continue to be successful, typically closing at just above asking price. Buyers can jump now or wait a bit longer for interest rates to come back down. Overall, the housing market will remain hot and competitive through the tail end of 2022.