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Mmm, Housing Forecasting 2022 2nd half

Housing Market Forecast for the Rest of 2022 [INFOGRAPHIC] | Simplifying The Market

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As we move into the latter half of the year, questions about what’s to come are top of mind for buyers and sellers. Near record-low mortgage rates coupled with rising home price appreciation kicked off a robust housing market in the first half of 20212, but what does the forecast tell us about what’s on the horizon?

Mortgage Rates Will Likely Increase, but Remain Low

Many experts are projecting a rise in interest rates. The latest Quarterly Forecast from Freddie Mac states:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

However, even as mortgage rates rise, the anticipated increase is expected to be modest at most, and still well below historical averages. Rates remaining low is good news for homebuyers who are looking to maximize their purchasing power. The same report from Freddie Mac goes on to say:

“While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”

Home Price Appreciation Will Continue, but Price Growth Will Likely Slow

Joe Seydl, Senior Markets Economist at J.P. Morganprojects home prices to continue rising as well, indicating buyers interested in purchasing a home should do so sooner rather than later. Waiting for rates or home prices to fall may not be wise:

“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”

Other experts remain optimistic about home prices, too. The graph below highlights 2021 home price forecasts from multiple industry leaders:
What Do Experts See on the Horizon for the Second Half of the Year? | Simplifying The Market

Inventory Remains a Challenge, but There’s Reason To Be Optimistic

Home prices are rising, but they should moderate as more housing inventory comes to market. George Ratiu, Senior Economist at realtor.comnotes there are signs that we may see the current inventory challenges lessen, slowing the fast-paced home price appreciation and creating more choices for buyers:

We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”

New home starts are also showing signs of improvement, which further bolsters hopes of more options coming to market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), writes:

“As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.”

Finally, while it may not fundamentally change the market conditions we’re currently experiencing, another reason to be optimistic more homes might come to market: our improving economy. Mark Fleming, Chief Economist at First American, notes:

“A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.

Boston Condos for Sale and the Bottom Line

As we look at the forecast for prices, interest rates, inventory, and home sales, experts remain optimistic about what’s on the horizon for the second half of 2021. Let’s connect today to discuss how we can navigate the market together in the coming months.

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Beacon Hill Condos for Sale

Ford Realty Inc., Charles Street, Beacon Hill

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I just report the news, I don’t make it!

There is a wide range of estimates, especially on house prices in 2021, with price forecasts ranging from increases of 2% to 10%.  These forecasts use different measures, but that is very widespread.
The key in 2021 will be inventory.  If inventory stays extremely low, there will be more housing starts and a larger increase in prices.  However, if inventory increases significantly, there will be fewer starts and less price appreciation. 

The table below shows a few real estate forecasts for 2021:

Housing Forecasts for 2021
New Home Sales (000s)Single Family Starts (000s)Total Starts (000s)House Prices1
Fannie
Mae
8721,1071,4442.1%2
Freddie
Mac
2.6%2
Goldman Sachs7361,4403.7%
MBA 9601,1211,4732.0%2
Merrill
Lynch
9501,5004.0%
NAHB8841,0341,383
NAR1,5008.0%3
Wells Fargo1,440
Zillow10.3%4
1Case-Shiller unless indicated otherwise
2FHFA Purchase-Only Index
3NAR Median Prices
4Zillow HPI

Boston Real Estate and the Bottom Line

That’s good, not just for sellers, and their real estate agents, but for the U.S. economy, as a whole.

Source: Calculated Risk

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