The general consensus among pros is that we’ll likely see a steady increase in home prices before an eventual slowdown.
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Though experts can’t quite put a finger on exactly what home prices will do in the coming few months, the general consensus is that we’ll likely see a steady increase before an eventual slowdown. Here’s what pros told us. (See the lowest mortgage rates you might qualify for here.)
Price appreciation could begin to slow down this month, says Holden Lewis, home and mortgage expert at Nerdwallet
“Home prices have been rising fast, and we might see a slowdown beginning in April as home buyers cope with skyrocketing mortgage rates,” says Holden Lewis, home and mortgage expert at Nerdwallet. Indeed, Bankrate data on mortgage rates revealed that average rates on a 30-year mortgage have now crossed the 5% threshold, with pros saying they may rise further in 2022.
Prices will rise, but inflation and higher interest rates may moderate those price increases, says Realtor.com senior economist George Ratiu
“As we head into … the spring season, I expect demand to keep upward pressure on prices, however as inflation continues to shrink buyers’ incomes and further jumps in interest rates cut into their buying power, demand may soften, which may lead to a moderation in the price trajectory in the second half of the year,” says Ratiu.
But the shortage of homes means we can expect prices to remain high during the spring homebuying season, says Bankrate.com analyst Jeff Ostrowski
“The median price of existing homes sold in February was up 15% from a year earlier, the National Association of Realtors said in March. Still, there’s an extreme shortage of homes for sale and that means prices are going to remain high for the spring homebuying season,” says Ostrowski.
Indeed, Ratiu explains the shortage like this: “Due to pandemic responses, labor shortages and accompanying supply chain bottlenecks which induced shart volatility in commodity prices, the pace of new home construction faltered during 2020 and 2021,” says Ratiu. As a result, the shortage of new homes increased from 3.8 million in January 2020 to 5.8 million in January 2022.
Expect year-over-year, double-digit price growth, says Lawrence Yun, chief economist for the National Association of Realtors
There’s an acute shortage of inventory and many properties have multiple offers on them, despite higher mortgage rates, says Lawrence Yun, National Association of Realtors (NAR) chief economist. “Some believe the interest rates will rise even more if they wait and thereby further push up demand. Home price growth on a 12-month basis should be on solid double digit appreciation through the spring months,” says Yun.
The competitive market will keep prices high, says Nicole Bachaud, Zillow economist
Bachaud says the market remains sizzling hot despite some of the most challenging conditions we’ve ever seen for buyers. “Homes are on and off the market in 11 days on average and sales volume is higher now than pre-pandemic even with record-low inventory. This competitive market continues to drive home prices higher and higher,” says Bachaud.