Prospective homebuyers have faced a seemingly endless barrage of price gains since the start of the pandemic, but according to economists, the worst may still be yet to come. The fate of the 2022 housing market is largely dependent on supply, especially as the U.S. grapples with the fewest number of homes for sale on record.
A large share of Millennials will reach the prime age for home buying in 2022, but regardless of the increased demand they bring to the table, a lack of inventory will keep homeownership out of reach for many first-time buyers. Home prices continue to accelerate by double digits, and mortgage rates inching closer to 4% could potentially add hundreds of dollars to a borrower’s mortgage payment each month, Realtor.com reports. As more buyers are priced out of an inflated market in late 2022, competition will ease, and home prices will decelerate, giving builders a chance to catch up on waning inventory.
The competition from other buyers could thin out a bit as more folks are priced out of homeownership. If there’s less demand, it could mean fewer (or at least less heated) bidding wars that don’t result in mind-boggling offers over the asking price.
“We’re going to see a bit more inventory and somewhat fewer home shoppers,” says Realtor.com Chief Economist Danielle Hale. She anticipates more homes will go up for sale as the weather warms up. “But that might not be until the later part of the spring.”