Real estate market predictions are somewhat like weather forecasts in that no one’s capable of being 100% accurate, but an industry expert can make a reasonably close prediction. With that in mind, here is the general consensus about what to expect in the housing market for the rest of 2022.
However, don’t let the predictions determine too much about your decision to buy a home — your finances and current circumstances should also influence your path.
House prices are strongly influenced by supply and demand. So while there was a recent slight dip in home prices, overall, property prices have increased –a trend likely to continue due to sustained high demand.
One of the key factors that have caused the increase is the housing supply shortage. Labor shortages and supply chains have impeded the construction of new stand-alone houses. In previous years, new house construction assisted in regulating the demand for houses. But because of the shortages, house prices may continue to increase.
Fannie Mae forecasts house prices to be up 10.8% for 2022. That’s a big jump from its prediction of 7.6% several months ago. But remember that these predictions can fluctuate almost daily.
Interest rates will likely continue to increase and level throughout the year, as reported by earlier 2022 forecasts. The previous year, real estate experts forecasted that average interest rates would break the 3% range in 2021. However, they did not increase much higher than 3.1 - 3.3%. But things are different for 2022. As of Aug 2022, the 30-year fixed-rate mortgage average interest rate hit 5.55%, as reported by Freddie Mac. Some of this increase was triggered by the Federal Reserve’s late fed fund hikes.
Rates also fluctuate daily, but generally, they’re about 2% higher than 6 months ago.
Remember, all these numbers will change as new data is collected. It’s also important to note that current rates are still lower than the average rate in the early 2000s.
2022 is a great year to purchase a house if you’re ready. Our housing market has experienced many changes over the years, so when considering it all, know that the current housing market shouldn’t be the only factor you should consider in purchasing a home.
2 things that really matter when purchasing a house are your personal situation and finances. No matter what’s happening in the housing market, you’re ready to purchase a home when your debt is managed, your income is steady, and you qualify for home financing that you can afford.
Based on predictions, the housing market will continue to change this year. House prices and mortgage rates will continue on an upswing. Considering that prediction, starting your homebuying journey is better now because the high demand outpaces the supply.
If you’re ready to buy a new house, give our mortgage professionals to help you get started.
Jeff Lazerson - Mortgage Columnist since 2011