Home price growth will slow dramatically in 2022, says CoreLogic


Subscribe to Fortune Daily to get essential business stories delivered straight to your inbox each morning.

This month a pair of bullish 2022 housing market outlooks dropped. First, Zillow’s latest forecast projected that home values will soar by 13.6% in the coming 12 months—revised upward from its 11.7% outlook published last month. Then, Goldman Sachs dropped a barn burner, predicting U.S. home prices will climb 16% between now and the end of 2022.

But perhaps home shoppers shouldn’t lose hope. In its latest forecast, CoreLogic projects that home prices will rise just 2.2% in the next 12 months. Relative to Zillow’s and Goldman Sachs’s forecasts, the real estate research firm’s outlook is, well, fairly bearish.

For perspective, over the most recent 12-month window the S&P CoreLogic Case-Shiller Home Price Index has shot up a record 19.7%. So if prices were to rise only 2.2% over the next year, it would mark a serious cooling from recent conditions. With that level of price appreciation—coupled with some pay raises and smart financial decisions—homebuyers might actually catch up a bit.

Why is there such a wide range among 2022 housing forecast models?

Never miss a story about real estate


As with most economic models, a lot of the variation boils down to assumptions. In particular, the outlook for mortgage rates. Now that elevated inflation (5.4% in September) looks like it’s going to stay for a while, the Federal Reserve is more likely to raise interest rates sooner rather than later. If it did, that would cause the average 30-year fixed mortgage rate, which is currently at 3.05%, to rise. Of course, rising mortgage rates would put negative pressure on the housing market. The sooner (and higher) mortgage rates rise, the lower price appreciation will be next year.

More must-read business news and analysis from Fortune:

  • China isn’t the only economy decoupling from the U.S.
  • What you need to know about the Delta Plus COVID variant and the danger it poses
  • Mortgage rates may spike 30% next year, according to a new forecast
  • How high Goldman Sachs predicts home prices will go in 2022
  • 4 things to know about stimulus checks in 2022 and beyond

Comments / 0

Comments / 0