At the start of 2022, leading economists and market experts predicted that home price growth would decelerate significantly throughout the year, but without any clear sign of relief from a nationwide housing shortage, real estate firms like Zillow and Fannie Mae are revising their forecasts to account for additional gains. Last year, Fannie Mae expected the median existing home price to climb 7.9% in 2022, but the firm now predicts that the median existing home price will jump from $355,000 to $384,000 during the year ahead, amounting to an 11.2% year-over-year gain.
Updated home price forecasts come in the wake of record low inventory levels across the U.S., but inflated mortgage rates could cause more buyers to back off in 2023, says Fortune.
For much of the pandemic, the underlying issue in the housing market has been a lack of inventory. A demographic wave of first-time millennial homebuyers, enticed by pandemic-induced low mortgage rates, jumped into the market and dried up inventory. But the inventory problem was supposed to ease a bit this year. But instead of rising, inventory levels actually fell further—which has only intensified the housing boom.
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