Key highlights from this report:
- Housing market inventory has been tight for many months now.
- But recent reports have shown an ongoing rise in available listings.
- As a result, we could see more housing market inventory in 2022.
- This in turn could have a cooling effect on the real estate scene.
Ever since the second half of 2020, home buyers across the U.S. have struggled with tight supply conditions within the housing market. And while inventory continues to be an issue, there are signs of improvement on the supply front.
According to a report published earlier this week, housing market inventory nationwide rose to its highest level of 2021 during the month of September. This is good news for buyers, many of whom have been frustrated by the supply-and-demand imbalance.
If these latest numbers are any indication, we could see more housing market inventory in 2022 compared to the past year or so.
Housing Inventory Could Increase for 2022
On September 30, Realtor.com published a real estate market report with data for the nation’s 50 largest metro areas. Among other things, this report showed a measurable increase in total housing market inventory nationwide.
Note: In this context, “inventory” refers to the number of homes for sale at any given time. Specifically, this report looked at the number of active listings on the Realtor.com website (one of the biggest property listing websites in the U.S., if not the biggest).
According to the Realtor.com report, available housing market inventory rose to its highest level of 2021 last month. In September, there were 646,053 homes listed for sale on the company’s website. That was the highest number of properties for sale we’ve seen in a long time.
This is one of several recent reports that suggest we could see more housing market inventory in 2022, compared to what we’ve become used to. As a result of these (and other) trends, the U.S. real estate market could become more buyer-friendly in 2022. And that’s long overdue.
Home Buyers Had ‘More Options’ in September
For home buyers, the biggest problem with the real estate market in recent months has been a lack of options. We’ve heard one report after another about buyers competing with multiple-offer scenarios, bidding wars, and cash offers from investors. Tight inventory conditions were the primary cause for these trends.
But lately, home buyers nationwide have had more properties to choose from, due to ongoing inventory growth within the housing market.
According to Danielle Hale, the chief economist at Realtor.com:
“Put simply, this September buyers had more options than they’ve had all year and while that’s typical of early fall, that’s not what happened in 2020. Still, it’s important to remember that while buyers may have an easier time this fall than they did in the spring, the market remains more competitive than it has been historically at this time of year.”
Translation: While the real estate scene is getting better for buyers, it remains highly competitive.
All in all, this latest report brings positive news for those planning to buy a home later this year or in 2022. If this trend continues going forward — which is a strong possibility — buyers could enjoy more housing market inventory in 2022.
A ‘Cooler’ Real Estate Market Next Year?
Rising home prices and a gradual rise in housing inventory could cool the real estate market down in 2022. And from an economic perspective, that would be a good thing.
Over the past year or so, the U.S. real estate scene could best be described as “overheated.” (Turbocharged, crazy and ludicrous are equally fitting descriptors.)
But that might be starting to change. A number of overlapping factors could slow the market over the coming months.
Home prices will continue to have a big impact on the overall pace of the real estate scene, especially as we move into 2022. According to Zillow, the median house value in the U.S. rose by around 17% over the past year. Some cities have seen much bigger gains.
In most U.S. cities, homes are a lot more expensive today than they were just two or three years ago. As a result, fewer buyers can afford to make a purchase. This reduction in demand will likely cool the real estate market in 2022.
Rising mortgage rates could have a similar effect, though not as profound as home-price growth. According to Freddie Mac, the average rate for a 30-year fixed mortgage loan rose above 3% this week, for the first time since June.
According to Freddie Mac’s September 30 report:
“We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.”
If housing inventory continues to increase going into 2022, it could add to this “moderating” effect. All of which is good news for future home buyers.
Disclaimer: This report contains forecasts relating to the real estate market. They are the equivalent of an educated guess and should be treated as such. The publisher makes no claims or assertions about future housing conditions.