4 Key Factors of the 2022 Housing Market

The 2021 housing market proved to be as contentious and unpredictable as the record-breaking year before it, and as leading economists and analysts look ahead to 2022, they anticipate more changes to come—just on a smaller scale. Mortgage rates are expected to rise from a 3% historic low to 3.5% by the end of 2022 as the Federal Reserve raises interest rates to control inflation.

Home prices will continue to rise, but at a much slower pace than in 2021 depending on individual market conditions, and bidding wars will also be phased out, though high demand will likely keep competition tight for the majority of the new year, reports Realtor.com. 

Right now, we’re still facing mortgage rates near historic lows—some 30-year rates are still near 3% and some 15-year rates near 2%—but pros do predict a rise. Dr. Lawrence Yun, National Association of Realtors (NAR) chief economist, forecasts the 30-year fixed mortgage rate to increase to 3.5% by the end of 2022 as the Fed raises interest rates to control inflation. For its part, Realtor.com predicts an average mortgage rate of 3.3% throughout the year, hitting 3.6% by end of year. And Bankrate, after yesterday’s Fed meeting, simply wrote that: “Interest rate hikes, soaring inflation and a smaller bond-buying program are a recipe for higher mortgage rates in 2022.”

The breakneck pace of housing prices in 2021—a nearly 20% rise—will slow, but experts say prices are still likely to go up. The National Association of Realtors estimates housing prices will climb 5.7% in 2022, while Realtor.com predicts a 2.9% rise.

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