If you're considering buying or selling a property and the housing market is at a turning point, you may be wondering if it's still a good time to buy a home. Should I relocate during this year? In order to answer these questions, let's consult the forecasts of residential real estate specialists for the second half of the year.

Where Mortgage Rates Will Go Depends on Inflation

One of the biggest questions on the minds of all buyers is where mortgage rates will go in the coming months. However, no one has a crystal ball to tell them exactly what will happen in the future. What housing market analysts know for certain is that the pandemic's record-low mortgage rates were an outlier, not the norm.

Rates have risen by more than 2% this year as the Federal Reserve responds to rising inflation. Mortgage rates are likely to rise if inflation continues to rise. Greg McBride, Chief Financial Analyst at Bankrate, explains it well:

“Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.”

Today's mortgage rate is an important factor to consider when buying your first home or selling your current home to make a move. When interest rates rise, they have an impact on your affordability and purchasing power. That's why it's critical to collaborate with a team of experts so you can get expert advice to help you make the best decision.

The Supply of Homes for Sale Projected To Continue Increasing

The number of homes for sale has increased this year, particularly in the spring. This is due in part to more homeowners listing their homes, but also to higher mortgage rates, which have helped to reduce the intensity of buyer demand. Slowing buyer demand slows the pace of home sales, allowing inventory to rise.

According to experts, growth will continue. Realtor.com recently updated their 2022 inventory forecast. They increased their projections for inventory gains dramatically in the most recent release, going from a 0.3% increase at the start of the year to a 15.0% increase by the end of 2022 (see graph below):

More homes to choose from is great news if you're looking for more options in your home search; however, don't expect a sudden surge in inventory. Because housing supply is still limited, you'll need to work with an agent to stay on top of what's available in your market and move quickly when you find it. It won't be easy to find a home, but it won't be as difficult as it has been in the last two years.

Home Price Forecasts Call for Ongoing Appreciation

The pandemic resulted in record-breaking increases in home prices due to an imbalance between the number of homes for sale and the number of buyers looking to make a purchase. According to CoreLogic, home values increased by 15% in 2021 and have continued to rise this year.

Even though the housing supply is increasing today, there are still more buyers than there are homes for sale, which keeps home prices rising. As a result, experts do not expect prices to fall; rather, they believe they will continue to rise, albeit at a slower pace this year. Homes are expected to appreciate by about 8.5% on average in 2022 (see graph below):

Selma Hepp, Deputy Chief Economist at CoreLogic, explains why the housing market will see deceleration, but not depreciation, in prices:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

Current homeowners looking to sell should know that their home's value isn't expected to fall, but delaying your purchase means your next home may cost more as home prices continue to rise. That is why, if you are considering purchasing your first home or are ready to make a move, it may make sense to do so now before prices rise further. However, once you buy a home, price appreciation will help you increase the value of your investment.

Bottom Line

Whether you're a buyer or a seller, you need to know what's going on in the housing market so you can make the best decision. Let's talk about your goals and what's ahead so you can figure out the best plan for your move.