Experts Split on Sales Expectations for 2022

U.S. economists and housing experts are evenly split on the pace of sales growth in 2022 with worsening affordability but rising inventory on the horizon, according to Zillow. In the latest Zillow Home Price Expectations Survey, 41% of participants predict sales growth, an opposing 41% expect a slowdown, and 18% say that sales will likely remain the same.

Though some predict major change, Zillow’s own forecast calls for just a slight increase in sales, on trend with rising sales throughout the past year. The 2022 market will hinge on inventory and price appreciation in a current seller’s market, especially as rising prices keep buyers on the sidelines and high demand perpetuates a nationwide housing shortage.

Panelists who foresee lower sales in 2022 point to financial strains on buyers as the main driving factors. Worsening home affordability was cited by 54% of respondents as the most important reason for a sales decline, while higher mortgage rates were noted by 28%. As home values skyrocketed in 2021 — up a record 19.3% year over year in November — affordability saw its greatest decline since at least 2014.

Among those panelists who anticipate an uptick in sales, additional inventory is overwhelmingly cited as the key; 51% said an increase in existing homes listed for sale will be the most important factor, while 21% pointed to more new homes being completed and listed for sale. Inventory began to recover through the summer of 2021, but lost ground in the fall.

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