Zillow December 2021-December 2022 Home Value & Sale Forecast

·2 min read
  • Zillow expects home values to grow 16.4% between December 2021 and December 2022.

  • Existing home sales in 2022 are expected to total 6.57 million in 2022, up 7% from an anticipated 6.14 million sales in 2021.

Existing home sales are expected to continue growing through 2022, approaching levels not seen since 2005, while annual home value growth is likely to peak and plateau in the early months of 2022 before slowing somewhat through the end of next year.

Home values are expected to grow 4.1% in Q1 2022, and to end 2022 up 16.4% from the end of 2021, with the pace of annual growth expected to peak at 20% in February before gradually slowing throughout the remainder of the year. The near-term, three-month forecast is up slightly from 3.7% growth expected previously from November to February. Longer-term expectations for home value growth have also risen: We previously expected 14.3% growth between November 2021 and November 2022. The robust long-term outlook is driven by our expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes.

Almost 6.6 million existing home sales are expected to close in 2022, up 7% from 2021. Existing home sales volume rose to 6.46 million (SAAR) in November, extending a streak of stronger-than-expected monthly gains towards the end of an up-and-down 2021 (December 2021 existing home sales data are scheduled to be released by the National Association of Realtors on Jan 20, 2022). This better-than-expected showing is the main contributor to the strength in our near-term outlook for the series.

However, downside risks to our forecast remain. Elevated inflation heightens the risk of near-term monetary policy tightening, which would result in higher mortgage rates and weigh on housing demand. The 30-year fixed rate broke above 3.5% this week, for the first time since Spring 2020. Higher rates are exacerbating buyers' struggles with affordability, and they might dissuade some existing homeowners from moving, by raising the monthly mortgage cost of even those homes priced similarly to their current homes. By dampening both buyers' and sellers' appetite in this market, rising rates could drive down sales volumes this year, with uncertain effects on home prices.

The post Zillow December 2021-December 2022 Home Value & Sale Forecast appeared first on Zillow Research.

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