2021 saw soaring home prices and issues such as lack of building materials like lumber. Builders and buyers took a moment to catch a breath and reanalyze the housing market conditions. The result was a few months that saw a decline in the number of new home sales and building permits and historically high prices in lumber.
The market is shifting again as we start 2022. The prediction for the housing market is that it seems to plateau with steadier production and suppliers meeting the high demand for homes. Such optimism comes amidst various homebuilders reporting a slowdown during 2021 and missing guidance for deliveries in the last quarter.
Reasons for a better housing outlook
Buyer demand and pricing held up for the last part of 2021, going into 2022. The reason for this is that most houses are within budget, making them affordable. If this sounds a bit controversial, let’s check the math.
Over the last two years, employees’ hourly pay increased by an average of 10%. The average 30-year fixed mortgage rate fell by 0.7%. Both those trends have increased the home-buying power for the average worker.
The rise in income and decline in mortgage rates allow people to afford to pay mortgages, while rising home prices make down payments challenging.
Home builders also hope operational costs will be reduced with the supply chain improving by the middle of this year. Companies have diagnosed problems and made adjustments. With the supply chain and production looking brighter, they have a better shot at increasing sales than they did in 2021.
An optimistic outlook for 2022
The increase in demand and household wealth and income levels create an optimistic outlook for the rest of 2022. Overall, the economy may be stronger and run more smoothly than it did for the whole of 2021.
For more information, contacts us at Gateway Realty to stay in the loop with housing trends, and for help selling our buying your next home.