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Current Housing Market Trends 2022 | Home Prices Falling?

Housing Market Trends 2022

The housing market is predicted to slow down further in the last quarter of 2022. For sellers, this could be terrible news, but for buyers, it’s great. Yet, there is still the problem of sky-high mortgage rates. The bright side is that if buyers hold off, the supply of homes will increase, putting further pressure on sellers to decrease prices. This would constitute a long-overdue course correction for the housing market.

Mortgage rates are skyrocketing. Home sales are declining. Supply is improving. Here are the latest housing market trends as seen in September 2022. We are witnessing a sharp halt in the housing market. The average 30-year fixed mortgage rate is currently just over 7%, up from roughly 3% earlier this year. This makes an already expensive housing market even more unaffordable.

If mortgage rates continue to rise, although, at a slower rate than in recent months, demand will decrease further in the last quarter of 2022, while home prices will continue to grow year-over-year, albeit at a slower rate. The real estate market has emerged as a boon for sellers and a source of worry for buyers in the middle of this epidemic. Home prices have been increasing in the mid-single digits for many years.

The housing market appears to be fully in the “correction” area since mortgage rates have surpassed the 7% threshold, home sales have cooled dramatically, and fears of a national recession loom large. In the fourth quarter of 2022, experts anticipate a further slowdown in sales, rising interest rates, and heightened concern among buyers and sellers over the future.

However, the housing market will not crash. The main reason is that the current housing market is not driven by lax lending rules, subprime mortgages, or overly leveraged homeowners. Home price appreciation in the current housing market is backed by fundamentals and is defined by a relative deficiency of supply relative to demand. This demand has been fueled mostly by millennials entering their prime home-buying years, as opposed to fix-and-flip investors.

It appears that most markets will experience a seasonal slowdown in the fourth quarter of 2022. The present rise in mortgage rates is likely to have a further depressing effect on house sales activity, leading to a steeper decrease in sales than is typical for the end of the year. Price cuts on homes for sale are on the upswing, and with fewer people buying expensive (higher-priced) homes, housing values could fall even farther than initially anticipated.

“Seasonality plays an important role in the housing market since it has an impact on housing demand and supply,” says Nadia Evangelou, senior economist and director of forecasting for the National Association of Realtors (NAR). “Every year, transactions and prices tend to be above-trend in the summer, while activity typically slows down by the time winter comes. Activity in the last quarter typically drops by 15 percentage points from the third quarter. Nevertheless, I believe the market will remain competitive due to tight inventory.”

Housing Sales Trends for September 2022

Existing Home Sales 

With the exception of a temporary decline at the onset of the Covid 19 epidemic, existing home sales are at their slowest since September 2012. According to the National Association of Realtors, sales of previously owned homes declined 1.5% in September from August to a seasonally adjusted annual pace of 4.71 million units. This was the sixth consecutive month of sales reductions. Sales were down 23.8% year on year. Despite the sales downturn, inventories continue to fall.

At the end of September, there were 1.25 million properties for sale, a 0.8% decrease from September 2021. At the current rate of sales, that equates to a 3.2-month supply. A balanced supply is defined as six months. Home prices are under pressure due to a lack of supply. In September, the median price of an existing home sold was $384,800, an 8.4% increase over September 2021. Prices increased across the board. This makes 127 months in a row of annual rises.

However, prices are beginning to fall. September was the third consecutive month-to-month price reduction, which is typical for this time of year. They are, however, falling faster this year, particularly at the bottom end of the market, where inventories are significantly smaller. Sales of homes priced between $100,000 and $250,000 fell 28.4% year on year, while sales of homes priced between $750,000 and $1 million were down 9.5%. Homes were on the market for an average of 19 days in September, up from 16 days in August and 17 days in September 2021.

“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” said Lawrence Yun, chief economist at the NAR. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010 when inventory levels were four times higher than they are today.”

Distressed sales – foreclosures and short sales – represented approximately 2% of sales in September, a marginal increase from 1% in August 2022 and September 2021. Single-family home sales declined to a seasonally adjusted annual rate of 4.22 million in September, down 0.9% from 4.26 million in August and down 23.0% from the previous year. Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 490,000 units in September, down 5.8% from August and 30.0% from one year ago.

In September 2022, 22 percent of total sales were made in cash, down from 24% in August and 23% in September 2021. This indicates that there is a sizeable group of buyers who are not impacted by mortgage rate changes. Investors (who make up many cash sales) made up 15% of all transactions in September, down from 16% in August, but up from 13% in September 2021. This also shows that higher interest rates have less of an influence on investors’ purchases as compared to first-time buyers.

Detached single-family houses continue to be in great demand. These properties provide greater living space and separation from adjacent houses than attached properties provide. Last month there was a surprising uptick in sales of new single-family houses and many experts believed that is likely to be short-lived as home prices continue to rise and the average contract rate for a 30-year fixed-rate mortgage tops 6 percent, decreasing affordability.

The South accounted for close to half of all the sales in September, accounting for 44 percent, followed by the Midwest at 24 percent and the West at 19 percent, with the Northeast accounting for only 13 percent. The highest sales were seen in the price segment of $250,000 to $500,000. This price range accounted for 44% of total home sales seen in September. The price segment in the $100,000 to $250,000 range accounted for 22% of total home sales. The price segment in the $500,000 to $750,000 range accounted for 18% of total home sales.

Existing Home Sales 2022

New Home Sales

The Commerce Department announced that new home sales increased by 28.8% month-over-month in August. The seasonally‐adjusted estimate of new houses for sale at the end of August was 461,000. This represents a supply of 8.1 months at the current sales rate. The median price of a new home sold in August was $436,800, a 0.3% decrease from July.

Mortgage applications have plummeted this year due to fast-rising mortgage rates, which are already at their highest level since the Great Recession. Therefore, sales are predicted to fall further. The Federal Reserve is raising rates this year to reduce decades-high inflation. It is increasing the cost of buying a home and crushing demand.

Residential construction was mixed in August 2022, as housing starts rose 12.2% while permits fell 10%, the Census Bureau reported recently. Housing starts were at an annual rate of 1.575 million while permits for future homes came in at an annual rate of 1.52 million. Single-family starts increased slightly, as home builders continue to moderate their production levels as the cost of construction materials remains at elevated levels and buyers react to rising mortgage rates.

Regionally, the biggest drop in permits came in the South, where markets have been among the hottest. Multi-unit starts also fell more than those for single-family homes. A slowdown in new construction is concerning because the housing market is still underbuilt in comparison to demand. With millennials continuing to enter their prime home-buying years and a lack of existing-home inventory, new home construction is critical in meeting shelter demand.

Privately owned housing completions were at a seasonally adjusted annual rate of 1,342,000 in August. This is 5.4 percent (12.1%) lower than the revised July estimate of 1,419,000, but 3.1 percent (10.5 percent) higher than the August 2021 rate of 1,302,000. Single-family housing completions in August totaled 1,017,000, up 0.4 percent (12.8%) from the revised July rate of 1,013,000. The August rate for units in buildings of five or more units was 318,000.

Housing Prices Continue to Trend Upward – September 2022

With a near record-low inventory of previously owned homes, some economists believe higher borrowing costs will have a moderate impact on the new housing market. In the long run, an infusion of newly-built homes could benefit the housing market. But there won’t likely be a surge in new inventories this year or even next year. Builders cannot develop new homes quickly enough to meet up with customer demand. Over a decade of underbuilding in the new home sector has increased pent-up demand, despite builders’ best efforts to increase inventory.

According to the forecast (by, home price rise may slow in the future, but it has remained hotter for longer than expected, leading to an upwardly revised prediction of 6.6 percent for 2022. Home sales are slowing, lowering their original 2022 growth forecast to 6.7 percent. While they now predict a significant drop from 2021, if house sales match their forecasts, 2022 sales will be the second-highest since 2007, after only 2021.

The listing price, also known as the asking price, is the amount a seller has marketed a property for, whereas the sale price is the amount it ultimately sells for. Although price growth slows, homes are still more expensive than a year ago. The latest data for September 2022 from shows that the national median home price for active listings decreased to $427,000 from a record high of $449,000 in June.

This represents an annual growth rate of 13.9%. However, it is a deceleration from last month’s growth rate of 15.4%, and down from a peak growth rate of 18.2% in June. The share of homes having their price reduced grew from 11.0% last September to 19.5% this year. The share is now above the 2017 and 2019 levels but still below the share of price reductions in September 2018 (21.2%).

And, for the week ending October 15, 2022, the median listing price rose by 13.2% over that same week last year.  The housing market is resetting as mortgage rates approach 7%, a level not seen in two decades and very likely to be exceeded in widely watched mortgage rate statistics later today. Several trend indicators, such as home price growth, new listings, and time on market changes, did not change much over the week.

In contrast, after several weeks of little movement in active listings, this week’s trend was up by the most in the last 15 weeks relative to last week’s. This increase in current listings certainly reflects the extent to which home buyers are struggling to navigate the market in light of the additional costs and reduced purchasing power imposed by higher mortgage rates, and it also signals fewer home sales transactions in the future.

Weekly Real Estate Trends

Housing Market Trends for 50 Largest Metro Combined Average

In September 2022, active listing prices in the nation’s largest metros grew by an average of 10.2%. Southern metros led the charge in active listing price growth, growing by 11% on average over the past year. Listing prices in the southern metros of Miami (+28.3%), and Memphis (+27.3%) grew the most among large metros, with Milwaukee (+27.0%) placing third.

Western metros saw the greatest increase in the share of price reductions (+15.6 percentage points), followed by southern metros (+10.7 percentage points). Homes in Phoenix (+32.3 percentage points), Austin (+27.4 percentage points), and Las Vegas (+20.0 percentage points) showed the greatest growth in the share of homes with price reductions compared to last year.

Region Active Listing Count YoY New Listing Count YoY Median Listing Price YoY Median Listing Price Per SF YoY Median Days on Market Y-Y (Days) Price Reduced Share Y-Y (Percentage Points)
Midwest 4.8% -14.0% 11.8% 8.4% +5 days +4.1 pp
Northeast -6.0% -17.2% 8.2% 5.6% +5 days +2.1 pp
South 57.5% -3.9% 11.8% 10.3% +6 days +10.7 pp
West 64.2% -12.2% 7.3% 6.6% +10 days +15.6 pp

Home Sales Price Trends for 2022

According to the National Association of Realtors®, house prices were still greater than they were a year earlier, even though increasing borrowing rates made housing less affordable. In September, the median price of an existing home that was sold was $384,800, which is 8.4% higher than it was a year ago. This marks 127 consecutive months of year-over-year increases, the longest-running streak on record.

However, it was the third month in a row that the median sales price retracted after reaching a record high of $413,800 in June, the usual seasonal trend of prices declining after peaking in the early summer. Due to seasonality, home prices tend to dip from July to August, but the reduction this year was more dramatic than typical, which suggests a considerable slowdown in the housing market.

However, home prices are still being supported by limited supply. At the end of September, there were 1.25 million homes for sale, which was down 2.3% from August and 0.8% from the previous year. At the current rate of sales, that equates to a 3.2-month supply, unchanged from August and up from 2.4 months in September 2021.

Much of the growth was fueled by an 11.8 percent increase in property prices in the South. All other regions experienced home price growth of between 6% and 8.5%. Sales continue to be more robust on the higher end of the market, where the supply is stronger.

  • The median existing single-family home price was $391,000 in September, up 8.1% from September 2021.
  • The median existing condo price was $331,700 in September, an annual increase of 9.8%.
  • The median price in the Northeast was $418,500, an increase of 8.3% from one year ago.
  • The median price in the Midwest was $281,500, up 6.9% from the prior year.
  • The median price in the South was $351,700, an increase of 11.8% from September 2021.
  • For the thirteenth consecutive month, the South experienced the highest pace of price appreciation compared to the other regions.
  • The median price in the West was $595,400, a 7.1% increase from September 2021.

Housing Price Trends 2022

Will Higher Mortgage Rates Crash the Housing Market?

Mortgage rates fell sharply early in the pandemic, reaching historic lows of less than 3% at the start of 2021. The days of sub-3 percent 30-year fixed mortgage interest rates are over. The mortgage rates are rising at the fastest pace in decades.  Housing prices are still higher than the previous year despite rising mortgage rates. Mortgage rates are slowing down home prices.

Economists predicted rates to rise by the end of 2022, but the recent surge in rates has many analysts wondering what would happen next. It happened faster than many predicted, with rates on 30-year fixed loans breaking through 5 percent in April to the highest level in more than a decade.

As mortgage rates rise, competition among those who can afford to buy should continue fierce for the time being. The economic recovery, particularly inflation, has been very evident in the late epidemic phases, and we now face a backdrop of mortgage rates rising at the quickest rate in decades. More than two-thirds of mortgage experts surveyed by Bankrate believe rates will continue to rise since inflation is not slowing down quickly.

The Fed has raised interest rates several times this year, and its policy has a direct impact on the interest rates on various mortgage products, specifically adjustable-rate mortgages and home equity loans. Fed policy has fewer repercussions for fixed mortgage rates, which track 10-year Treasury yields more closely. Borrowers will see an end to the historically low rates that typified the period following the 2008 and 2009 global financial crises.

Experts disagree on the direction of mortgage rates in the coming week. 64% of respondents to Bankrate’s weekly poll believe that interest rates will increase, while 18% believe that they will decrease and another 18% believe that they will remain the same. It appears that mortgage rates will remain between 7% and 7.5% over the new few weeks. Rates are expected to remain unchanged in this range until the Federal Reserve sees that its monetary policy is decreasing inflation.

As of November 02, 2022, interest rates jumped for almost all types of loans compared to a week ago. The national average 30-year fixed-mortgage rate is 7.22 percent, unchanged over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 6.89 percent. The average rate for a 15-year fixed mortgage is 6.46 percent, up 2 basis points since the same time last week.

  • At the current average rate, you’ll pay a combined $680.14 per month in principal and interest for every $100k you borrow.
  • Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $869 per $100k borrowed.
  • Monthly payments on a 5/1 ARM at 5.55 percent would cost about $571 for each $100,000 borrowed over the initial five years
  • But with adjustable-rate mortgages, it could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.

How Mortgage Rates Have Moved in November 2022:

  • 30-year fixed mortgage rate: 7.22%, the same as last week
  • 15-year fixed mortgage rate: 6.46%, up from 6.44% last week, +0.02
  • 5/1 ARM mortgage rate: 5.55%, up from 5.53% last week, +0.02
  • Jumbo mortgage rate: 7.22%, up from 7.20% last week, +0.02

With inflation blazing and the U.S. economy chugging along, the average 30-year mortgage rate was 7.22 percent this week, no change from the previous week, according to Bankrate’s nationwide poll of large lenders. Although the Federal Reserve doesn’t influence rates on fixed mortgages, its recent move to raise the federal funds rate due to inflation — and the indication it’ll continue to raise that rate this year — does have some impact on mortgages. One of the primary challenges that investors and buyers will need to address this year is rising interest rates.

Today’s rates are much higher than they have been in years, which is likely to have a few knock-on consequences in the US housing market – though they are unlikely to produce significant declines in housing prices. While quickly rising mortgage rates may dampen the strong housing demand somewhat, do not anticipate a halt to home price appreciation. A slower rate of appreciation is more likely. The impact of higher mortgage rates is not yet fully reflected in the recent sales data but it has given affordability a big hit.

Keep in mind that, despite recent increases, mortgage interest rates are still within reach when seen in historical context (back in 1981, rates topped 18 percent for a 30-year fixed-rate mortgage). If the house you’re eyeing is a good fit for your family and won’t put you in financial peril, go ahead and buy it. The longer you delay, the more money you’ll have to spend on rising rentals and saving for the down payment you’ll need to buy a house. It all depends on your financial status and the housing market in the area where you live.

Rising mortgage rates still have the potential to drive a sizable portion of buyers away from the housing market. This year has already seen a significant increase in housing prices. When combined with interest rate increases, it may become too much for many homebuyers. As a result, the first half of the year is likely to see continued high house prices. When inventory increases and mortgage rates rise, the housing market may soften in the second half of 2022 (and in 2023 as well).

Even with rising mortgage rates and higher prices, the housing market would remain a seller’s market due to very low supply and increasing demand as more millennials are projected to buy houses in 2022. Now millennials make up the largest share of homebuyers in the US, according to a 2020 survey from the NAR. According to a new study by, buying is more cost-efficient than renting in a growing number of the largest cities in the country.

This is encouraging news for the millions of millennials who are approaching the peak homebuying age. Millennials are the largest generation in history, and they are already in their mid-thirties, approaching their prime home-buying years. They were delayed in purchasing a home, but are now back in full force. Thus, we have two, four, or five years of millennial homeownership.



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