Numbers show home price growth deceleratin

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Real Estate


As 2022 nears the spring selling season, the housing market might finally be cooling after more than a year of frenzied sales.

Demand is still high, and prices are still rising – just at a significantly slower rate. In the most recent data from November 2021, home prices rose just 14.9%, down from 19.1% in October. Forecasters expect the average annual increase to slow to 6% in 2022.

Despite the increase, Single family home sales rose 1.9% in November. The median existing single-family home price was at $362,600 while condo prices appreciated 4.4% to a median of $283,200. Home sellers realized record profits.

Buyer enthusiasm could wane if mortgage rates rise sharply. The Federal Reserve has signaled it will both increase interest rates and winnow down bond-buying activities to cool runaway inflation.

If mortgage rates follow as anticipated, it would be an additional wet blanket for buyers already tiring from high prices. At that point, analysts believe the tide may turn as sellers begin to moderate prices to coax buyers back.

As the market balances, it could bring inventory to a healthier level. Existing home listings have been anemic the last five years, usually running below three months’ supply (six months’ supply is considered healthy).  Record-low inventory has been worsened by supply chain disruptions and labor shortages.

Even with an increase, mortgage rates are expected to remain historically low in the next few years. Combined with more new construction inventory, analysts predict the most home sales since 2006.

Even if housing inflation does hit its peak in the coming months, there’s still a huge housing shortage. There are still about 46.1 million millennials who aren’t homeowners yet.

First time buyers’ share of the total purchase market has fallen steadily since the beginning of the pandemic, tumbling from 32% in November 2020 to 26% in November 2021.