Over the past year, more and more home buyers in the U.S. have found themselves priced out of the real estate market due to rapidly rising home values. And now, a lot of them are naturally wondering the same thing:
Will home prices in the U.S. go up or down in 2022?
While no one can predict future housing trends with complete accuracy, most forecasts predict that home prices will continue to go up in 2022 — but at a slower pace. (See the two forecasts below for more on this.)
It’s also worth mentioning that real estate conditions can vary greatly from one city or region to the next. So we will certainly see some variation locally, with respect to home price growth in 2022.
FYI: Mortgage rates are expect to rise next year as well. So that’s something else to consider, if you’re planning to use a mortgage loan when buying a home.
Forecasts: U.S. Home Prices Will Go Up in 2022
After a year of tremendous growth, many folks are wondering if U.S. home prices will go up or down in 2022.
The general consensus among housing analysts and economists is that house values will continue to climb, at least in most U.S. cities. At the same time, most forecasters predict that price growth will slow down or moderate in 2022 compared to this year.
According to the real estate data company Zillow, the median home value in the United States rose by around 15% over the past year. (This was reported in early August 2021.) Looking forward, the company predicts that U.S. home prices will continue to go up into 2022 — and possibly by double digits.
In August of 2021, the company’s website stated:
“United States home values have gone up 15.0% over the past year and Zillow predicts they will rise 13.2% in the next year.”
Freddie Mac, the government-sponsored corporation that buys mortgage loans from lenders, also expects home prices to keep rising in 2022. But they offered a more modest forecast compared to the Zillow outlook presented above.
In a long-range housing market forecast published in July 2021, the research team at Freddie Mac predicted that house values in the U.S. would slow down in 2022 compared to this year.
To quote their report:
“The increase in house price growth will be less transitory than the increase in consumer prices, as the U.S. housing market will continue to struggle with a shortage of available housing for many months to come. But, we do forecast house price growth to moderate in 2022…”
They expect house values to rise by an average of 12.1% by the end of 2021, followed by a gain of 5.3% in 2022.
Real Estate Conditions Can Vary Locally
So, will home prices go up or down in 2022? While no one can answer this question with certainty, forecasters seem to agree that house values will likely keep rising in 2022. An imbalance between supply and demand is the primary reason for this.
But it’s worth remembering that real estate conditions can vary greatly at the local level. The forecasts presented above have to do with average or median home prices for the nation as a whole. At the city and metropolitan level, trends and conditions can vary.
Consider the following example:
- According to Zillow, the median home value for the Boise, Idaho metro area rose by a whopping 40% over the past year (as of August 2021). Looking forward, the company predicted that Boise-area home prices would rise by around 21% over the 12 months ending in August 2022.
- In contrast, the median house value in San Francisco, California rose by a mere 2% over the past year or so. Prices in that city will likely rise somewhere within that range during 2022 as well.
This is just one example of the real estate market variations that can occur from one city to another.
While home prices across the U.S. are expected to continue rising in 2022, we will no doubt see a lot of variation at the local level. In fact, house values in some cities might even start to level off next year. On the other hand, some of the hottest housing markets (like Austin and Boise) could see double-digit price gains next year as they did in 2021.
Summary and Conclusion
Will U.S. home prices go up or down in 2022? As you can see, this is a complex question to answer.
The general consensus among housing analysts is that house values nationwide will keep rising next year. But at the local level, it’s not a yes-or-no question. That’s because home price trends are driven by local market conditions, such as supply and demand.
If you’re planning to buy a home later this year or in 2022, the best thing you can do is research local housing market conditions in your area. It’s also wise to have a real estate agent on your side, especially if you happen to be buying a home in a highly competitive housing market.
Related: Will it be easier to buy in 2022?
Disclaimer: This article contains forecasts and predictions relating to home price growth in the United States. Those projections were issued by third parties not associated with the publisher. Housing-related forecasts are the equivalent of an educated guess and therefore far from certain.