Real Estate: Housing predictions from Freddie Mac into 2022
High house price growth has been supported by increased demand due to low mortgage rates, disposable after-tax income that has risen during the current recession, and a major shortage of housing supply relative to our population. The increase in house price growth will be less transitory than the increase in consumer prices, as the U.S. housing market will continue to struggle with a shortage of available housing for many months to come. But, we do forecast house price growth to moderate in 2022, with full-year house price growth of 12.1% in 2021 followed by 5.3% in 2022.
The rapid run-up in house prices may be starting to exhaust potential homebuyers.
We’ve seen indications of softening demand in recent home purchase mortgage applications data. And, while sales metrics remain above pre-pandemic levels, the pace of sales has cooled since the first quarter of this year with home sales slowing for the past four consecutive months. That’s reflected in our home sales forecast, which has total home sales declining to 6.9 million in 2021 and 2022 after reaching a seasonally adjusted annual rate of 7.6 million and 7.2 million in the fourth quarter of 2020 and first quarter of 2021, respectively.