The U.S. residential real estate market showed significant strength and resiliency in 2021, the second year of the COVID-19 pandemic. From coast to coast and by any metric — total sales, median prices, time on market — housing demand remained red-hot throughout the year and served as a primary engine of the U.S. economy.
Consider this: Existing-home sales in 2021 will exceed 6 million, the most in 15 years. Median existing-home prices recorded year-over-year increases in October 2021 for the 116th consecutive month — the longest-running streak on record.
According to NAR’s 2021 Profile of Home Buyers and Sellers, homes typically sold at asking price and in just one week — a record pace — while the report found that two of the primary motivators for buyers and sellers were additional space and the desire to live closer to family and friends.
So, how will the housing market perform in 2022?
Expect strong housing demand to continue and prices to increase, although both will likely moderate over the next 12 months. We anticipate mortgage rates will continue their upward trajectory next year as the Federal Reserve responds to rising inflation by raising interest rates. The combination of higher prices and climbing mortgage rates could keep some buyers out of the market entirely in 2022.
Inventory constraints — which have been a major theme throughout 2021 — may ease a bit, particularly as homebuilders increase construction and mortgage forbearance programs come to an end. The influx of available homes will be welcome news for prospective buyers who have faced tough competition and bidding wars over the last 12 months. More inventory and a continued healthy demand for housing will help support another year of impressive sales figures in 2022.
If nothing else, the pandemic reminded us to always expect the unexpected. While it will be interesting to see how the real estate market plays out this year, I am certain that Realtors® will be there every step of the way to help millions of Americans fulfill their dreams and achieve their goals.
Last year, 87% of buyers used an agent or broker, and 90% of sellers hired an agent to sell their home. Why? Realtors® provide invaluable, trusted expertise and in-depth knowledge about the real estate transaction process from start to finish. We help our friends, colleagues, neighbors and clients navigate the complexities of homebuying and selling — one of the most consequential decisions in a person’s life. We’re invested in and committed to doing all that we can to make our communities thrive — and to always ensure consumers come out on top in the process. No matter the year or the market conditions, that’s a constant.