Housing Markets Trends in 2022 That Could Affect Home Buyers

With the end of 2021 approaching, home buyers are now looking ahead to next year. And many of them share the same kinds of questions regarding the housing market.

What will the market be like in 2022? Will it be easier to buy a home next year, compared to 2021? In short, what should home buyers expect from the real estate market in 2022?

5 Housing Market Trends We Could See in 2022

While no one can predict future housing conditions with certainty, we can make a few educated guesses based on current trends and conditions. With that in mind, here are five housing market trends for 2022 that might affect home buyers.

1. Tight inventory conditions expected to continue.

Low supply within the housing market was one of the biggest stories of 2021. The short version is there aren’t enough homes on the market to satisfy the demand from buyers. And experts believe this trend will continue in 2022, to some degree.

But there might be a bit of good news on the horizon, from a home buyer’s perspective. Some analysts expect to see a gradual increase in the number of homes for sale during 2022.

For instance, a recent housing market forecast from Realtor.com predicted a slight uptick in overall inventory levels. To quote their December 1st report:

“Realtor.com forecasts 2022 home sales (+6.6% year-over-year) will hit their highest level in 16 years as buyers remain active and for-sale inventory begins to recover from recent steep declines.”

This is arguably one of the most important housing market trends for 2022, from a home buyer’s perspective. But don’t be discouraged. If we learned anything from 2021, it’s that buyers can still succeed despite the ongoing inventory crunch.

2. Home prices will likely keep climbing.

In many U.S. cities, home prices rose at an unprecedented pace during 2021. Some housing markets experienced annual growth of more than 30%. As a result of this trend, house values across much of the country have reached all-time record highs.

This is another housing market trend that will carry into 2022. While price growth is expected to slow down a bit over the coming months, home values nationwide will probably keep rising to some degree.

This could create a sense of urgency among buyers — and rightfully so. If prices continue to climb as expected, it could make a strong case for buying a home sooner rather than later. Buyers who postpone their purchases until later in 2022 might end up paying more.

But again, real estate conditions can vary from one city or metro area to the next. So you’ll want to conduct local research to see what’s happening in your housing market.

3. More competition from millennials?

According to the Realtor.com forecast cited earlier, the 2022 housing market could bring a surge of buying activity from millennials. (These are people born between 1981 and 1996.)

Realtor.com’s researchers stated that a large number of these folks are entering prime home-buying age. So they could contribute to a rise in home sales in 2022, while increasing housing market competition in general.

4. Higher loan limits have been announced.

Here’s some good news for home buyers planning to buy a house in 2022. As we explained in a previous article, borrowers will enjoy higher mortgage loan limits next year compared to 2021.

Federal housing officials have increased the loan limits for conventional conforming loans, as well as FHA-insured mortgages. They made these changes in response to significant home-price growth that occurred during 2021.

Basically, this means borrowers have a higher range of financing to work with in 2022, without having to use the more restrictive “jumbo” loan products.

5. Favorable mortgage rates continue, but…

Mortgage rates are another important housing market trend to watch in 2022.

The average rate for a 30-year fixed mortgage loan hovered below 3.2% for all of 2021. And while rates are expected to creep upward in 2022, they’ll probably remain favorable. That’s good news for borrowers.

A forecast published by Freddie Mac earlier this year suggested that 30-year mortgage rates could average around 3.5% during 2022. That would be a slight increase from where we are in December of 2021, but still low by historical standards.

So there you have them, five housing market trends for 2022 that could affect home buyers!

Disclaimer: This article includes forecasts issued by third parties not associated with our company. Such predictions are the equivalent of an educated guess and should be viewed as such.