Year-over-year increases in the seasonally adjusted Case-Shiller Composite 10, Composite 20 and National indices were the strongest on record in 2021, but a recent deceleration in house price growth could change the forecast for 2022, according to the CalculatedRisk Newsletter. The Case-Shiller index shows a jump in median prices during October followed by a decline at the start of December as price gains slowed ahead of the new year.
Inventory will be the deciding factor for home prices in 2022, but experts still anticipate record low home outputs leading to more double-digit price growth in the year ahead.
A sharp increase in mortgage rates is possible, especially if inflation stays elevated and the pandemic subsides (each wave of the pandemic has pushed down interest rates). And at some point, affordability will start to matter, but in general - with low mortgage rates - houses are still somewhat affordable (see the bottom of this post on affordability).
My guess is inventories will probably increase, especially in the 2nd half of 2022, but inventory will most likely still be low historically. Also, prices tend to have momentum, so unless mortgage rates increase sharply or inventories rise quicker than expected, we should expect further price increases in 2022.