Housing demand expected to return to pre-pandemic levels

by Liz Hughes

U.S. housing demand is on its way to a refresh, according to Realtor.com’s updated 2022 forecast, which is predicting more inventory growth giving buyers a better chance to find a home. 

A new report from Realtor.com sees housing demand returning to pre-pandemic levels due to rising inflation and mortgage rates. It’s predicting double-digit growth from 2021. 

But despite that growth in demand, affordability issues will be part of the deal, as the market continues to see higher home prices and mortgage rates. 

The forecast says a break from the rapid home-sale pace will allow some space for active listings, which it says will grow 15% year over year, compared to its originally projected 0.3% growth. With the summer months ripe for builders ramping up production, combined with returning seasonality, the housing market could see a refresh by early fall, according to the report. 

Realtor.com chief economist Danielle Hale says the big shift in financial conditions since the end of 2021 has the housing market 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 shows some are taking a step back from the market,” she said. “Our updated 2022 forecast anticipates that demand will continue decelerating through the summer, providing breathing room for the inventory recovery to accelerate.”

Hale says the fall could be the opportune time to find a home for both first-time and repeat buyers, but preparation will still be key throughout the year, as it remains a seller’s market with prices staying high. 

“For buyers who choose to wait until later in the year, take that time to assess your budget so you’re set up with a strong financial footing whenever you’re ready to move forward,” she said.

The updated forecast reflects the housing market moving toward being more sustainable, yet it says sales are projected to hit a near record-high pace this year. 

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