Housing Market Outlook 2022

The big questions for homeowners is “what is my house worth now“, “when should I sell“, and “where might I move to?” For buyers, it is “will I ever be able to afford a home?”

With rising mortgage rates and threats of higher mortgage payments, it’s hardly surprisingly, August’s home sales dropped significantly and ending home sales slid 2.0% from July.  Contract signings fell year-over-year by double-digit percentages.

However, home prices did not decline on average, although they’re down since the summer peak. As NAR’s chief says this month, the bidding wars may be a thing of the past. Yet demand is still there, and any drop in the mortgage rates brings a torrent of desperate buyers willing to jump on homes for sale.

Realtors this month again, are more optimistic about their selling prospects, but home buyers are somewhat less rosy about what’s happening. With mortgage rates back above 6%, downpayments and monthly payments are far beyond what most can afford.

Mortgage applications have fallen to a 22 year low and refinancing is something out of the past.  With a rising Fed rate almost certain through the rest of 2022, the fate of buyers is certain. Sales will decline.

“Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Sales lag behind mortgage applications rates, which is a statistic some experts see as predictive of 2023’s market condition. Some believe prices may drop by 20% by summer 2023.

US Home Sales Fall Again in August

US resale home sales slid 0.4% from July 2022 and is down 19.9% from 12 months ago. Median resale home prices actually rose 7.7% from one year ago to a new level of $389,500 yet are down $25,300 on average since the summer 2022 peak.

See the full August report and housing charts below.

The Fed is not appreciating the latest housing market report from NAR, since they’re desperately trying to subdue what is a fairly optimistic stock market investor sentiment, consumer sentiment, and discourage home sales.  Builders too stepped it up last month to build and sell more homes, given solid demand for their product.

NAR Realtors remain optimistic about first time buyers, investor sales, and cash sales.  Home buyers however feel differently. The Fannie Mae Home Purchase Sentiment Index® (HPSI) fell 0.8 points in August to 62.0, its 6th consecutive reduction.  Their index is down 13.7% since last August.

Perhaps more in tune with Fed desires, is the rise of foreclosures. We’re far from a talked about housing market crash, however rate of foreclosure filings increased by close to 14% between July and August. Attom data reports the number of U.S. properties with foreclosure filings in August was 34,501, up about 118% from last August.

With so much economic uncertainty now, more homeowners are willing to part with their prized asset. But many will be receiving a lower selling price.  Selling your home now seems like good advice if you have somewhere to go. 

Stats showed that buying a home is $561 more expensive than renting, even with the rises in rent. Rents don’t fall and given they’re a key part of the inflation index, we know the Fed will have to increase a great deal to hold inflation down. They’ve already given up on the housing market where mortgage payments are skyrocketing.  The mortgage payment risk has ended new mortgage financing and will put pressure on some homeowners who much refinance in the next year.

Hard to comprehend, but this housing market has been artificially manipulated for too long. Some still say a perfect storm is brewing and that the experts can’t see it coming. A hard fall is predicted but not necessarily a housing market crash.  Consumers are still optimistic, have considerable equity and cash, and are able to buy bargains once they appear.

The experts aren’t gauging the fearfulness factor of consumers though. Some believe the Fed doesn’t have the courage to launch interest rates up too much higher, but other economists say inflation would rage out of control in this global picture. The next 6 months could be tumultuous for all asset markets.

Most recent stats for July as of July 21st from Redfin:

  • for the week ending July 21, 30-year mortgage rates rose to 5.54%, up from 3.11% at beginning of 2023.
  • Fewer people searched for “homes for sale” on Google— down 23% from 12 months ago.
  • Redfin Homebuyer Demand Index is down 17% year over year during the week ending July 17.
  • homebuyer touring activity fell 2% from the start of the year, compared to a 22% increase at the same time last year
  • Mortgage purchase applications were down 19% from a year earlier during the week ending July 15 to the lowest level since April of 2020.

August Home Sales Report

Total Existing Homes sales, historic.
Screenshot courtesy of NAR. Total Existing Homes sales, historic.

The median price of a single-family home is up 30% ($100,000) since the pandemic began.

Home Price History Chart.
Screenshot courtesy of NAR. Home Price History Chart.

The National Association of Realtors report for June shows the highest increases in list prices were in Miami (+40.1%), Orlando (+30.6%) and Nashville (+30.6%).   Austin Texas reported the highest increase prices compared to last year up 24.7% while Phoenix price discounts  rose 22.2% and Las Vegas saw list prices increase by 20.1%.

While resale homes saw sales decline, so too did new home sales. Buyers appear to be walking away from deals, suffering from a loss of confidence in the market. But when will home prices fall?

Housing Inventory Continues Falling in 2022

Total housing inventory  at the end of August decreased 1.5% from July (1,280,000 units) yet is unchanged from August 2021. Unsold inventory remained at a 3.2-month supply – identical to July yet is still up from 2.6 months in August 2021.

Inventory will remain tight in the coming months and even for the next couple of years.  Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply. The softness in home sales reflects this year’s escalating mortgage rates” — Lawrence Yun, NAR Chief Economist Lawrence Yun.




As it has been every month, sales at the more affordable levels where most buyers are is down about 22% for homes under $250k. Those in the luxury range are still growing but not by as much.

Home price change from one year ago
Screenshot courtesy of NAR. price change from one year ago

A recent interview with National Association of Home Builders CEO Jerry Howard suggests the housing market is in for a tough time. Home builder confidence sunk 12 point a new level of 55 in July. With fewer homes being built, amidst such intense demand, it makes many believe prices won’t be falling much.

Howard said the US market is currently about 1 million homes short. Demand will continue which means the shortage will increase. That may confuse anyone who suspects that the US will face a housing market crash at some point, perhaps 2023 or 2024 along with a recession. How long can the deficit funding juggling go on, before the house of cards collapses?

Inflation, Rising Rates, Land Shortage, and Rising Populations

The US economy however is another matter. With inflation expected to continue raging by many observers, it’s hard to expect home prices will be able to decline much. Homebuilders look down the road to estimate buyer demand, and with sales analytics, demand forecasting and other tools, today’s builders are no fools.

They’re not going to expose themselves to serious financial risk if the government is doing all it can to collapse the housing market. They claim “the cost of land, construction and financing exceeds the market value of the home.” 13% of builders in the HMI survey said they reduced home prices in June to help maintain sales and/or limit contract cancellations.

Redfin Housing Report July

Redfin has released housing market stats for the week ended July 3rd. It shows sales down and although prices are still up 13% year over year, home owners are beginning to drop their asking prices.

New Redfin data reveals:

  • The median home sale price rose 13% in the last 12 months to $396,000.
  • The median asking price of newly listed homes has risen 15% since last July to $399,973
  • asking prices dropped 2.1% from one month ago
  • mortgage payment on a typical home has risen 40% from 1668 to $2,342 at the current 5.3% mortgage rate, up 40% from $1,668 a year ago
  • Pending home sales saw biggest reduction (13% drop vs last year)
  • New listings of homes for sale fell 1.4% year over year
  • Active listings fell 2% vs one year ago
  • Time on market for home rose by 3 days, from the record low of 15 days in May, vs 18 days now.

Thanks to Redfin for the latest market data. NAR’s June data will be out in two weeks.

Recession, Rising Mortgages Rates Combine to Set the Market Back

Here’s some factors that suggest home prices will decline however the question of whether there might be a housing market correction or crash is unsettled.

  • inflation looking like it will persist for a long time
  • deglobalization changes supply chains
  • international trade tensions rise
  • commodity prices heading back up with China reopening
  • natural gas and oil heading back to record levels
  • consumer sentiment as lowest levels ever
  • consumer savings depleting every month
  • Europe facing a recession
  • jobless claims are rising
  • mortgage rates continue rising quicker than the Fed rate thus raising the cost of buying

So there is no one coming to save the housing market and new construction permits and starts are plummeting.

Redfin forecasts that home prices will finally level out next year. Is that a little too optimistic given current economic trends? Will the next Fed rate increase be .75% or will they give up fighting the out of control inflation?  Redfin reports that the median home sale price for the four-week period ending June 26 is up 14% from a year earlier.

Further they report that buying is still cheaper than renting, and that rent prices will likely rise. In fact, inflation and high rent prices could push homelessness and rent defaults over the edge, resulting in political action.

Rental Housing Report August

The key to a flood of homes coming onto the market in the fall and winter, and in 2023, is that financing costs are out of the reach for more buyers each month. They should keep a count of buyers who give up each month.  As we know, it takes times for prices to come down.  A series of geopolitical shocks is what I have said for years, would likely launch a recession, stock market crash and housing downturn. The Russia and China situations are highly volatile and the CBOE VIX is twice what it was 11 months ago.

Interestingly, the home listing growth in 2022 is on the very same trajectory as previous years:

New home listings USA. Screenshot courtesy of Redfin.

Realtors are enthused with the number of cash buyers, but first time buyers are withdrawing from the market. As prices and mortgage rates rise, more buyers will officially end their pursuit of a home. The dream will die. So the question then becomes when will wealth buyers retreat from this market as well.

Is it too late to sell your house? With prices persisting, homes under $500k likely won’t see price drops since competition for those properties grows with every mortgage rate hike.

The US economic forecast is very uncertain so forecasting home prices in the next 3 to 6 months, or next 5 years is more than just difficult. However, we can feel confident that home prices will stay elevated and that real estate investors and buyers will find homes holding their value for many years, even past a recession.

Home Buyer and Home Sellers

Confusion is what most are feeling given other contradictory factors:

  • home price history timeline charts show prices keep rising faster than inflation
  • affordable housing shortages wont’ be fixed anytime soon – endless demand
  • rising US immigration and more migration to low tax states
  • millennials still need to buy to start their families
  • rent prices are rising too fast which eats down payments and savings
  • those buying in high tax states could see lower prices
  • weak political support for new housing zoning and builder assistance
  • a Republican mid term election may encourage investors that the future is brighter
  • it’s the only investment you can live in
  • mortgage rates will likely recede once this current economic crisis eases (after recession)
  • big fortunes from investing in the stock market are over now
  • young adults more aware of financial planning, retirement, and long term value of a house
  • rental income properties offer excellent returns, rising rents, and good tax writeoffs
  • deglobalization means growing investment in US businesses and supply chains

This long term 5 year valuation might be what drives home purchases. The fact is real estate holds its value, especially with the work from home movement supporting residential prices and rents.  Without a big push to build new houses, condos, apartments and multifamily dwellings, demand will always outpace supply. Therefore price rises are pretty well assured.

Will home prices drop and is a housing crash possible? Experts say not likely because demand is too high and buyers do have money to purchase houses.

Stats show the luxury homes market isn’t being affected much (see stats below) so wealthy buyers aren’t anticipating a stock market crash or a housing market crash in the US.  Home sales in the south are seeing a steep change and markets such as Austin Texas look very shaky with huge increases in inventory.

Buyers still can buy via 5 year adjustable rate mortgages, fully knowing that rates in the years ahead will be lower. Yet, the Fed is experiencing difficulty affecting inflation at all. It’s thought to be out of their hands, uncontrollable. Pushing rate hikes might worsen the cost of credit instead of stopping the purchasing of homes.  The Fed may believe they must push the US economy into recession, to control price rises.

Single-family and Condo/Co-op Sales

During August 2022, sales of single-family houses decreased .9% to a seasonally adjusted annual rate of 4.28 million in August, down 4.32 million in July and down 19.2% from August 2021. The median existing single-family house price reached $396,300 in August, up 7.6% from August 2021.

Existing condominium and co-op sales rose 4% from July to a seasonally adjusted annual rate of 520,000 units in August. Yet this is 24.6% less than August of 2021. The median existing condo price jumped 7.8% to $333,700 in August.

The cities with the highest price growth over the last year were:  Miami (+33.4%), Memphis (+25.8%) and Milwaukee (+25.0%). Cities reporting the highest increase in price reductions, year over year, included Phoenix  (+30.9%), Austin (+24.8%) and Las Vegas (+24.4%).

NAR’s Lawrence Yun said “Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year… Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”

Regional US Home Sales

home prices by region August 2022.
home prices by region August 2022. Screenshot courtesy of NAR

Resale-home sales in the Northeast grew 1.6% from July to an annual rate of 630,000 in August, yet is down 13.7% from August 2021. The median price rose 1.5% year over year in the Northeast to  $413,200.

Resale-home sales in the Midwest fell 3.3% from July to an annual rate of 1,160,000 in August, which was down 15.9% from August 2021. The median price in the Midwest rose 6.6% to was $287,900, year over year.

At in August, Resale home sales in the South remained the same as July, to an annual rate of 2,130,000, yet dropped  19.3% from August 2021. The median resale home price in the South increased 12.4% to $356,000, an rise of 12.4% from August 2021.

In the West region home sales expanded 1.1% compared to July to a new annual rate of 880,000 in August. That is down 29.0% from August 2021. The median price in the West is up 7.1%to  $602,900, year over year.

Luxury Housing Market Forecast

Realtors confidence in first time buyers is declining slightly for obvious reasons, however they remain confident of wealthy buyers who are buying second homes and vacation homes.

This graphic shows clearly that the market is in luxury priced homes. Soon the luxury condo sector will be soon also be the focus for 2022 as Americans head back to the cities to find apartment and condo availability dried up.  Realtors serving investors will have the best outlook in a continuing tight market. NAR’s realtor sentiment stats show agent’s mood is darkening. Hopefully, the spring will bring renewed growth.

Cities with the top performing luxury home sales outlook include Austin, Phoenix, Nashville, Tampa, Denver, Dallas, Atlanta, and Miami.  This is the percent change in price by price category during May. Compare it to the one above for June.

Existing home prices by price range. Luxury home prices still rising.
Screenshot courtesy of NAR. Existing home prices by price range. Luxury home prices still rising.

Enjoy this epic report on the US housing market and forecast. You’ll find commentary from experts and stats from major providers including NAR, Forisk, US Census Bureau, NAHB, Zillow, Realtor.com, St Louis fed, Statista, Fannie Mae, Fred, Nerdwallet, and more. Please bookmark and share on social media.

New Home Construction and Sales

August Building Permits

In August, privately‐owned residential housing building permits in August rose 10% month to monty to an adjusted annual rate of 1,685,000 units, a 14.4% decline from August 2021 rate of1,772,000. Single‐family permit authorizations in August rose 3.5% to 899,000 units which is a 3.5% from from the July figure of 932,000 units. Authorizations of units in buildings with five units or more were at a rate of 571,000 in August.

August Housing Starts

Privately‐owned housing starts in August dropped 12.2% to a seasonally adjusted annual rate of 1,575,000. which is 0.1% below last August’s rate of 1,576,000 units. Single‐family housing starts in August rose 3.4% to a rate of 935,000.

August Housing Completions

Privately‐owned housing completions dropped 5.4% in August to a seasonally adjusted annual rate of 1,342,000 units. that was 3.1% above the August 2021 rate of 1,302,000.  Single‐family housing completions in August rose .4% month to month to a rate of 1,017,000.

Latest New Housing Construction Stats August 2022.
Latest New Housing Construction Stats August 2022.

Home Price Forecasts

While NAR’s Yun believes in moderate price increases of 2 to 3%, Zillow predicts they will rise 16.4% in the next year. that’s after a 9% rise reported last year. Goldman Sachs has its price growth forecast at 16% by end of 2022.

NAR 2022 home price forecast.
Screenshot courtesy of NAR. 2022 home price forecast.

See more on the Los Angeles, Bay Area, San Diego, Dallas, Denver, Austin, New York, Boston, Chicago, Philadelphia, Atlanta and Miami real estate markets. Check the state stats for California, Florida, and Illinois.

Home Sales by Price Range

Home sales in the luxury price category continue to sell well, while sales in the lower affordable range have struggled due a lack of inventory.

People still ask if home prices and rent prices will fall are likely to be continually disappointed. With shortages and an improving economy amidst record low mortgage rates, the forecast for continuing rising prices, especially for renters since homebuyers will be forced to rent a home, until inventory grows.

Mortgage payments rising. Screenshot courtesy of NAR.
Screenshot courtesy of NAR

Many consider 2022 the beginning of a 5 year period where moderation in prices will happen just as sales have begun to slump.  Yet sales and prices don’t always correlate.  Instead the prediction for sales and prices will continue to diverge, until the economy fully reopens. That will enable new construction, and give homeowners the confidence to sell their homes at a very attractive price. With nowhere to go and economic uncertainty with Covid fears, the real estate market forecast remains subdued, at least for this year.  2022 is a different story.

Stats for Major US Metros

Interested in your local real estate market?  See the metro reports for Boston, Atlanta, New York, Philadelphia, Los Angeles, San Diego, Bay Area, Dallas, Denver, Houston, Chicago, and Miami. See also reports for smaller centers including Salt Lake City, Austin, Colorado Springs, San Antonio, Tampa, Seattle, and Manhattan.

US Housing Market Forecast

The US Housing Market & Forecast Report is the single most comprehensive view available on residential real estate in the US. You’ll find all the data, videos, charts, expert opinions and predictions vital to your decision to buy or sell a home this year.

You’ll find data and resources from NAR, Zillow, BEA, Mansion Global, CBO, Knoema, Freddie Mac, and other authoritative sources below in this extensive review of the US housing market.

Housing Market Forecast Sections:

  1. Projections for Growth 2022 and next 5 years
  2. Optimism for 2021 and 2022 Forecast
  3. Should You Buy a House This Year?
  4. Is a Housing Market Crash Even Thinkable?
  5. 28 Key Factors Driving the Market
  6. Will the Recovery Add Fuel?
  7. Hottest State Housing Markets
  8. Predicting the US Property Market
  9. What’s Happened in the Housing Market in 2021?
  10. Who Are US Realtors
  11. How US Realtors Market Your Home
  12. Hottest Cities in the US
  13. Residential Real Estate Forecast & Predictions
  14. New Home Construction
  15. Housing Affordability
  16. Mortgage rates
  17. Mortgage Forbearance, Delinquency and Foreclosure Report
  18. The US Economy
  19. Realtor Housing Recovery Index
  20. Which Metros Will Do Best in 2021?
  21. Will the Housing Boom Continue?

 1. Projections for Growth

Zillow in January, predicted 16.4% growth in prices for 2022 (it came close).

Homes Sales Prediction. Screenshot courtesy of Zillow.

 2. Optimism for 2022

A recent Reuter’s poll of nearly 40 housing analysts forecast the U.S. Case-Shiller house price index would rise 5.7% in 2021.  It actually rose 18.8%, the biggest rise in 34 years.  They forecast a further 4.6% in 2022, but how seriously can we take that

Housing market factors Poll results.

Screenshot courtesy of Reuters. Housing market factors Poll results.

Housing Market Forecast 2022

2022 will be a special, transitional year, out of the pandemic where the economy is fully back to normal. Several situations will make 2022 a stellar year in the US housing market including:

  • stimulus spending by the US government
  • recovering US and global economy
  • un-satiated demand from Millennial and space seeking work from home buyers
  • demand from investors for rental properties
  • home builders able to increase new construction output
  • inflation in 2021 starts easing in 2022 and mortgage rates may decline

Homebuyers are wondering if home prices might fall in 2022 and 2023. Not just a few buyers are hoping for a downturn or a recession to help out with their goal of buying a house.

Expert prognosticators in the industry only expect price rises to moderate next year, and not to head downward. As the previous graphic forecasted for 4.6% price growth.

U.S. house prices will continue to race ahead this year, at nearly twice the pace predicted just three months ago, according to a Reuters poll of analysts who said risks to that already upbeat outlook were skewed to the upside — from Reuters report.

 3. Should You Buy a House This Year?

The big question a lot of homebuyers are asking right now is whether this is a wise time to buy a home?  Should you wait until the Covid 19 variant threat is finally stopped? Will mortgage rates jump?

The best answer might be no.  With prices this high, the risk of economic failure in 2023, you could lose the home you just bought.  The current wave of euphoria is driven by a fear of missing out, and a poor understanding of what is to come in 2023 and the next 5 years.

Best advice for homebuyers might be to wait for a major real estate market downturn or even a crash.  However, there is a risk of a major currency devaluation stemming from significant inflation and government debt. The crisis with the US border and with China trade will handcuff the current government. Their plan to raise capital gains is pushing money out of the country and this will help ease demand for US housing.  However, corporate buyers of homes for conversion to rentals is a significant trend that may not stop.

 4. Is a Housing Market Crash Even Thinkable?

Fortune magazine in a recent report says a falling prices are only possible in 13 cities. But we’ve reached a point with rising rates, vertical out of reach price growth, and war and inflation crises, that the threat is imminent. Sanctions against China for funding Russia could be enough to set it off.

Anyone considering buying a home right now has to be aware of events that could lead to a housing market crash. At the very least, we’ll see a significant financial event within 5 years. If not in 2022, then perhaps next year though. The immediate outlook is too strong.

The run-up in home prices in the luxury, high-riced levels has been steep. This sector would crash first should the current US administration’s economic policies not work.   Few people see crashes coming, yet with prices so high amidst a weak economy dependent on Fed stimulus, while the trade deficit grows, you’ll hear many warnings online. It’s a good idea to review the crash factors and weigh against your own situation.

The uncertainty of Covid 19 variants is causing anxiety, however the trend seems to easing.  The summer sun is not far away. Globally too, the infection rate is falling and vaccinations continue. This should ease restrictions on house hunting and of course, and seeing people return to work.

Each month, home prices grow amidst shrinking supply (except January) and many experts and buyers alike are asking how high this will go before prices either level off or collapse?  Growing construction and a lower number of pandemic-related buyers are bound to take some of the steam out of home prices during the 2nd half, however the impact of new construction really won’t be felt until 2022.

Although Covid vaccinations are happening, it’s unlikely to stem the tide of buyers seeking single detached houses for some time yet. Low mortgage rates, rising employment, and growing millennial demand will maintain prices.  The delay of the economic recovery further extends the delay of home construction yet makes Fed stimulus more likely.  The danger to the markets is the end of the moratorium on mortgage payments and rent payments. Those debts keep mounting and represent future bankruptcies.

Much of the swell in demand in the last 12 months was from a select group of buyers, not from the unfortunate unemployed the media focus on. And as international buyers return to the bidding wars in 2021, the outlook for prices is a jump of 10% or even 15% more.

Let’s look at more statistics and influences on what is driving the buying decision. Because if the reasons people are buying are really strong, then sales and prices will rise even if the economy sags. And didn’t it do that in 2020?

 4. 28 Key Factors Driving the Home Buy/Sell Decision this Spring

  1. strong economic recovery expected in 2nd half
  2. fear of missing out amidst record low housing supply
  3. millennials and even Gen Z’s forming new families and need a house
  4. homeowners have nowhere to go thus can’t sell
  5. home buyers want homes in more suburban and rural areas
  6. Americans who moved back to parents or with relatives will want their own place to live this year
  7. work from home expected to continue
  8. government will spend more stimulus money because they want to ensure the jobs and housing markets don’t stagnate
  9. Fed promised to keep interest rates down
  10. supply of homes making it unlikely many will be able to buy
  11. new home construction, material and land prices rising faster
  12. foreclosures may free up some homes for sale
  13. migration: work from home still driving buyers out of the cities for more room for a home office, backyard, space to relax
  14. migration: businesses moving out of high tax states to lower-tax states
  15. inflation plus money supply plus need for housing could inflate house prices severely
  16. buyers holding high-value stock portfolio’s could sell to buy a home
  17. buyers see a house as a potential rental income property
  18. many sellers want to get out of the city they live in for something new after a horrible pandemic period
  19. real estate is a preferred asset when cash, savings, and stocks can only go down in value
  20. cities and regions will still not allow housing development (NIMBYs) thus more demand for the limited available stock of homes
  21. homes are a safe haven (those renting saw how insecure their week to week lifestyles are where they could be left with nothing later in life, and wondering whether social security will even over their bills)
  22. speculation (real estate investors including the new crowdfunding buyer who can take more risk don’t see a big downside to real estate and are willing to pump money in for houses or rental properties)
  23. as employment grows there will be more demand for homes in 2021, 2022 and for 5 years ahead
  24. states such as Texas, Florida, Arizona drawing new residents (climate, jobs, business growth, low taxes)
  25. Los Angeles, San Francisco, New York losing residents (cost of living, taxes, failing economies)
  26. global economic growth will hit 4% in 2021 (world bank report)
  27. 225,000–500,000 homeowners could face foreclosure this year
  28. homelessness in the major cities will become a negative factor driving people out of the cities and shunning buyers

 5. Will the Recovering Economy Add Fuel to the Price Fire?

If home prices soared during a major recession wouldn’t further gains logically follow when the economy does a 180 turn? And these economic swings guarantee that the one side of a shift will equal the opposite side. We have volatility and speculation as a new normal making the house buying decision a difficult one.

Houses for sale this year will be significantly higher, and that’s because it takes time for markets to cool. With no big negative influences in sight (other than oil and energy shortages) there might not be anything to cause sudden drops.

And a K-shaped recovery doesn’t necessarily mean the lower wage earners won’t have the financial act together by 2022. There will be a lot of pain, but the odds of it affecting the single-detached home market is low.

Overall, economic growth is expected to be strong in the 2nd half, after vaccinations have been given to more than half of vulnerable Americans. Covid 19 could disappear, only kept alive by a few vaccine refusers who are so sparsely located that the disease isn’t transmitted much.

As businesses reopen, fed by 3 trillion dollars, and as international trade and tourism resumes, Americans and foreign visitors will be spending again. This economic resurgence won’t happen in a hurry, which helps to bring confidence to conservative investors and help to allay inflation.

The CBO expected economic growth, employment consumer spending to grow strongly in Q4 2020, but it didn’t due to continued shutdowns from the Corona Virus threat.

 6. Hottest State Housing Markets

According to our friends at Bankrate.com, here are the current rankings of each state’s situation.

Overall Ranking State Home Price Appreciation Job Growth Cost of Living Ranking Tax Rank
1 Utah 3 2 31 8
2 Montana 2 12 29 5
3 Nebraska 12 6 22 28
4 Idaho 1 1 21 20
5 Indiana 10 10 11 9
6 Arizona 4 8 27 24
7 Washington 6 27 38 16
8 New Hampshire 9 46 43 6
9 North Carolina 17 16 12 10
10 South Dakota 45 11 24 2
11 Tennessee 19 14 5 18
12 Georgia 18 5 8 31
12 Kansas 25 18 16 35
12 Ohio 11 30 6 39
15 Alabama 28 4 10 41
16 Oregon 15 39 40 15
17 Maine 8 38 39 29
18 Missouri 36 13 3 12
19 Arkansas 32 9 2 45
20 Kentucky 26 25 7 19
21 Iowa 43 20 17 40
22 Wisconsin 31 36 20 25
23 Wyoming 42 19 32 1
24 Vermont 20 47 41 43
25 Florida 22 23 25 4
26 South Carolina 37 7 18 33
27 New Mexico 13 37 23 23
27 Virginia 35 21 30 26
29 Mississippi 30 3 1 32
30 Michigan 23 50 4 14
31 North Dakota 48 32 33 17
32 Colorado 27 26 36 21
33 Connecticut 5 28 46 47
34 Rhode Island 7 45 45 37
35 Minnesota 38 44 28 46
36 Oklahoma 40 24 9 30
36 California 16 43 50 49
38 Pennsylvania 24 40 26 27
39 Massachusetts 21 48 47 34
40 Alaska 44 34 48 3
40 Texas 39 15 14 11
42 Delaware 41 41 34 13
43 New Jersey 14 42 42 50
44 Maryland 33 22 44 44
45 West Virginia 46 29 13 22
46 Nevada 34 33 35 7
47 Illinois 47 35 19 36
47 Louisiana 50 17 15 42
49 New York 29 49 37 48
50 District of Columbia 51 31 51 46
51 Hawaii 49 51 49 38

 7. Predicting the Housing Market

Even the top housing market experts can’t predict because the variables are unknowns – often political reactions. It’s going to come down to home buyers doing their homework about the property market in their city or state and weighing the risk of buying in 2021.

The fact so many are hesitant due to the economic insecurity, might be the saving grace in easing a bubble condition. Because if buyers are certain, they will be bidding up high. The sales and price velocity are very high.

Some housing economists and economic experts are talking about this year’s potential residential real estate boom while others are warning about a downturn this year. In this article, we take a closer look at housing statistics, opinions, and the trends or velocity of the market, as we move deeper into 2021 and onto 2022.

There are some strong demographic trends supporting brisk home construction, home sales, and mortgage buying. Add the pandemic work-from-home-migration trend and you have strong reasons to buy a house. There are renters who would do anything to move out of their tiny apartments to a bigger place with a walkable neighborhood.

And this is all taking place in an ultra-low mortgage rate period, with some homebuyers holding a lot of cash savings for a down payment.

With the growing vaccination rates across the country from New York to Florida to Texas to California, we could an unleashing of buyer demand and a return to work and recharging economy.

 8. What’s Happened in the Housing Market in 2021?

Median Home Price:

$334,500 sold price for single detached homes

Average Mortgage Rates

Down to 2.73%, for 30 year fixed rate from Freddie Mac

Total Homes Sold

842,000 existing homes sold in 2020

Total Housing Inventory

Declined by 23% in 2020 to 1.9 months supply which is a record low

Days on Market

DOM declined by 10 days to 76 days on average

 9. Who Are US Realtors?

Just a quick diversion here to look at the professionals you may be hiring to sell your home or assist in buying a house. While you can sell your home fast now, having a Realtor able to help you sell it for more may be a better option.

REALTOR® Demographics 2021

65% percent of REALTORS® are licensed as sales agents, 22% hold broker licenses, while 15% have broker associate licenses.

64% of all REALTORS® are female , 55 years of age, who attended college and own a home.

Average experience of US REALTORS® is 9 years and have been with their current firm for only 4 years. They normally work about 36 hours per week, and earned a median gross income of $49,700 in 2019, up $8700 from 2018.

Realtors averaged about 12 transactions (sides) in 2019. Most Realtors are independent contractors with a very low number of homes to sell.

 10. How Realtors Market Homes

Realtors are increasingly turning to online real estate marketing strategies to market client’s homes and build demand. From bidding wars to reaching homeowners willing to sell via predictive analytics tools, the modern real estate is very different from their forebears.

Here’s some facts you need to know about Realtors® in the US:

  • Realtors® communicate with clients via email (93%), while 92% use SMS text messaging, and 37% use instant messaging (Facebook).
  • 11% of REALTORS® under 49 years of age owned a real estate blog, and 76% of female REALTORS® and 73% of male REALTORS® use social media for communications and real estate marketing purposes.
  • Agents believe their most valuable technology tools are: local MLS websites/apps (64%), lockbox/smart key devices (39%), and social media platforms (28%).
  • The top 3 tech tools they believe bring them the best quality of home buyer and seller leads ares: social media (47%), MLS sites (32%), brokerage’s website (29%) and listing aggregator sites (29%).
  • 48% of real estate brokerages and companies believe that keeping pace with new technology as the most formidable challenge they face in 2021 and 2022. Of course, finding seller leads is easily the toughest challenge and then closing a sale with them.

On the other home buyers they serve tend to about 47 years of age, are 31% first time buyers who are typically 33 years old. They have a median household income of $106,700 and typically buy a home built in 1993 with 3 bedrooms and 2 bathrooms.

Homebuyers typically finance 88% of the home price and buy or sell using a Realtor, whom they would recommend to others.

Homebuyers found their home via:

⦁ Internet: 52%
⦁ Real estate agent: 29%
⦁ Yard sign/open house sign: 6%
⦁ Friend, relative, or neighbor: 5%
⦁ Home builder or their agent: 6%
⦁ Directly from sellers: 2%
⦁ Newspaper ad: 1%

The typical home seller is 56 years of age, has a median household income of $107,100, and has lived in their home for a decade. 89% of sellers used a real estate agent to sell their home and they typically received 99% of the listing price, after the home sat on the market for 21 days.

Recent sellers typically sold their homes for 99% of the listing price, and 38% reported reducing the asking price at least once.

The typical home sold was on the market for 3 weeks. 41% of sellers found a real estate agent through a referral by friends or family, and 26% used the agent they previously worked with to buy or sell a home.

Most homebuyers shop for homes online however, and public interest in in-person open houses is43% lower than a year earlier. Realtors will be doing more real estate marketing online.

 11. Hottest City Housing Markets United States

City Nielson Hotness Rank NAR Hotness Rank NAR hotness rank change M/M NAR Hotness Rank Y/Y
Median List Price
Tupelo, ms 300 268 -8 -5 $245,000
Lebanon, pa 299 82 -44 13 $283,900
Battle Creek, mi 298 154 -18 -79 $156,000
Springfield, oh 297 16 1 -3 $137,000
Bismarck, nd 296 277 -5 4 $304,900
Wausau, wi 295 232 -24 -97 $189,900
Pittsfield, ma 294 227 14 52 $475,000
La Crosse-Onalaska, wi-mn 293 74 3 16 $272,500
Odessa, tx 292 269 -10 -137 $235,000
Yuba City, ca 291 13 17 2 $445,000
Johnstown, pa 290 234 -13 11 $89,500
Eureka-Arcata-Fortuna, ca 289 77 -13 -3 $449,000
The Villages, fl 288 142 14 -136 $315,000
Morgantown, wv 287 242 8 9 $279,900
Wichita falls, tx 286 66 40 -3 $140,000
Texarkana, tx-ar 285 184 -12 59 $194,900
Concord, nh 284 12 25 68 $355,000
Elizabethtown-Fort Knox, ky 283 57 -34 100 $210,000
Monroe, mi 282 46 -7 24 $230,000
Jefferson City, mo 281 54 -36 77 $178,000
Hattiesburg, ms 280 173 36 -45 $232,000
Albany, ga 279 265 -20 26 $145,000
Pottsville, pa 278 113 -14 -2 $110,000


New Home Sales

New home construction starts decreased 6.0% to a new annual rate of 1.580 million units last month.  This drop is much more than economists had forecast (1.658 million units in January). Homebuilding overall fell 2.3% compared to January of 2020.

New Home Construction

Housing permits have jumped the last few months. Starts and completions are getting back on track this spring.

The National Association of Home Builders offered an optimistic look on the new home construction market in July. NAHB says single-family and multifamily starts were 9.3% higher in the Northeast, 5.9% higher in the Midwest, 5.2% higher in the South and 1.4% higher in the West.

Overall new home permits rose 18.8% to a 1.50 million unit annualized rate in July. Single-family house permits increased 17.0% to a 983,000 unit rate and multifamily permits rocketed 22.5% to a annualized 512,000 pace.


 13. Housing Affordability

What is hampering housing affordability is competition and rocketing prices, housing development regulations, lack of developable land, lack of builder subsidies, stagnant wages and high unemployment, and rising building materials and labor costs. Government regulation and NIMBYism are overpowering the market’s opportunity to create more housing hence we can expect higher home prices.

Rising inflation and interest rates could be the key factor affecting housing affordability in the next 3 years. Political disruption about actually ruin the market, perhaps even pushing us into a housing market crash.

 14. Mortgage Rates

The rate for a 30 year fixed rate mortgage is back above 6% according to NerdWallet and Zillow.

Current mortgage rates
Screenshot courtesy of NerdWallet. Current mortgage rates

30 Year Fixed Rate Mortgage Rate

Screenshot courtesy of St Louis Fed

15. Mortgage Rates and Payments

According to Freddie Mac, In August, the average rate for a 30-year, conventional, fixed-rate mortgage was 2.84% which was down from 2.87% in July. The average rate in 2020 was 3.11%.

According to Freddie Mac, the 30-year fixed mortgage rate dropped to 2.86% from 2.88% from the previous week. NAR believes mortgage rates to inch higher, to perhaps 3.5% by mid-2022 as the Fed moves forward with tapering.

The typical US monthly mortgage payment on a single-family home is up to $1,215 and the household income required to be able to buy a house increased to $58,314. In 17 major cities, buyers need a $100,000 down payment on a purchase.

 16. Mortgage Forbearance, Delinquency and Foreclosure Report

Black Knight reported that almost 3.6 million 90-day defaults occurred in 2020 – the largest number since 2009. 2.1 million homeowners are currently seriously delinquent on their mortgage payments, and with 600,000 forbearance plans expiring in March, it will create 1.5 million more serious delinquencies than at the start of the pandemic. As of last month, there were above 2.7 million homeowners in active forbearance plans. 12% of borrowers are now in forbearance.

Home Foreclosures

The good news is that home foreclosures hit an all-time low in January. ATTOM Data Solutions January 2021 U.S. Foreclosure Market Report showed a total of 9,702 U.S. properties had foreclosure filings — default notices, scheduled auctions or bank repossessions. It is 11% down from a month ago and down 80% from 12 months ago.

The bad news is that this is due to the President’s foreclosure moratorium on repossessions of homes on government-backed mortgages. the fear is that when it ends in March, there will be little to prevent foreclosures.

Home Repossessions

The World Property Journal reports that US lenders repossessed 1,428 U.S. properties in January 2021, which was 28% lower than December 2020. It was also 86% less than last year.

Those states with an annual decrease in REOs in January 2021 included: Illinois (-86%); Florida (-83%); Maryland (-83%); California (-82%); and Texas (-82%).

 17. The US Economy

There are plenty of varying forecasts and predictions for the 2021 US economy. Most outlooks are optimistic after a disastrous 2020.

The Conference Board has this to say about the US economic forecast:

The Conference Board forecasts that US Real GDP growth will rise by 2.0 percent (annualized rate) in 1Q21 and 4.4 percent (year-over-year) in 2021.* Following a lull in the economic recovery in recent months, we expect the pace of the rebound to reaccelerate as new COVID-19 infection rates decline, the vaccination program expands, and the prospects of another large fiscal support program improve. We expect the recovery to continue into next year and forecast growth of 3.1 percent (year-over-year) in 2022.

BEA reported that the U.S. international trade deficit increased in 2020 from $576.9 billion in 2019 to $678.7 billion in 2020 As a percentage of U.S. gross domestic product, the goods and services deficit rose .5% from 2.7% 2019 to 3.2 percent in 2020. The goods deficit increased from $864.3 billion in 2019 to $915.8 billion in 2020. The services surplus decreased from $287.5 billion in 2019 to $237.1 billion in 2020.

BEA reports that Real GDP fell 3.5% in 2020 vs 2019. It had increased 2.2 percent in 2019. Real (GDP) grew 4.0 percent in the fourth quarter of 2020 according to the “advance” estimate released by the Bureau of Economic Analysis. 3rd quarter of 2020 had a rebounding 33.4 growth, in comparison with the Q2 shutdown period.

GDP growth USA
Screenshot courtesy of Statista


All markets, including Los Angeles, San Diego, Denver, New York, Manhattan, Dallas, Boston, Philadelphia, Atlanta, Chicago, Austin, San Antonio, Salt Lake City, Tampa and Miami, have felt the crush of demand and much higher home prices. Florida is booming while California’s housing market is hurting.

Whether it’s a good time to buy a home might depend on who you are and why you’re buying. For renters stuck with high rents and zero equity going forward, anytime is a good time. Overall, the HPSI is rising again a grim economic performance in December. Buyers sentiment is down significantly from just one year ago. As the pandemic eases, we could see the index rise slowly back to previous levels around 90.

HPSI Index. Homebuyer Sentiment
HPSI Index Sentiment. Screenshot Courtesy of Fannie Mae.

 22. Is This a Housing Bubble?

We’ve had a ten year bull housing market where millions have purchased a new or resale house.  Wouldn’t the current price levels along suggest this is a housing bubble?  Economic conditions are so positive, it will take a nasty monetary/fiscal event to burst this bubble.  The prediction is for further price raises, although moderating as the economy slows.

As the world recovers from the Covid pandemic, central banks will open up spending again to get their economies fully recovering.  Deglobalization will mean more American consumer and investor money will stay in the USA and not to China or Russia. That means more jobs created which will further support home purchases. It might be a bubble, but it doesn’t look like it will burst.

See more on local housing markets in Denver, Dallas, Houston, San Antonio, Austin, Salt Lake City, Salt Lake City, and Los Angeles.

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