TRENDS & ISSUES • Home price growth has been revised to show an increase of 6.6% by the end of the year—revised from 2.9%.
The takeaway:
Inventory Growth and Affordability Challenges Expected to Continue
T
By Jordan Grice
he strain of climbing inflation and mortgage rates has weighed down the once frenzied market behavior that folks grew accustomed to last year. While that has carried its share of immediate challenges for buyers, a recent report from realtor.com ® indicates that an easing of the once-frenetic housing market could yield some necessary benefits as well. The organization recently released an updated version of its 2022 forecast, predicting double-digit inventory growth by the year’s second half, providing a “better-than-expected chance to find a home” for buyers in the market. According to the report, an anticipated summer lull in home sales will offer some space for active listings to tick up faster than expected. The updated forecast anticipates a summer break from a feverish pace of home sales that will provide space for active listings to grow at a faster annual rate than initially projected. While this bodes well for the market, experts also expect affordability issues to continue straining buyers. 64 July 2022 RISMedia’s REAL ESTATE
Overall, forecast updates paint a picture of a housing market heading toward improved sustainability.
Forecast revisions:
• Active listings will grow 15% yearover-year—up from 0.3%—as the inventory recovery accelerates in the second half of 2022. • Mortgage rate forecasts have been revised upward from 3.6% to 5.5% by the end of 2022. • Home sales are expected to slow, shifting from an original 2022 growth expectation to a decline of 6.7%.
No one could have anticipated that inflation and mortgage rates would increase to the degree they have in recent months, which have sent ripples into the real estate market that have unfolded, particularly with 30year mortgage rates surpassing 5% earlier this year. “Combined with record-high home listing prices and rents, home shoppers are feeling the strain on their budgets,” the report reads. “As a result, buyer demand has been softening this spring from its early 2022 surge.” “Financial conditions have shifted in a big way since the end of 2021, and the housing market is adjusting accordingly. As Americans grapple with higher prices for everyday expenses while today’s buyers face housing costs that are up 50% from a year ago, recent home sales data show that some are taking a step back from the market,” says Danielle Hale, chief economist for realtor.com®. “Our updated 2022 forecast anticipates that demand will continue decelerating through the summer, providing breathing room for the inventory recovery to accelerate. As a result, this fall could be an opportune time to find a home—for both first-time and repeat buyers alike. Still, preparation will be key throughout 2022, as it continues to be a seller’s market and asking prices remain high.” RE For more information, please visit www.realtor.com.
Jordan Grice is an associate online editor at RISMedia. Email your real estate news ideas to him at jgrice@rismedia.com.
