US housing market to slow down in 2022

The housing market in the United States is set to be more stable this year after two years of substantial house price growth, online marketplace LendingTree has predicted.

Average house price growth will be less than 5% this year after recording double digit growth during the pandemic.

However LendingTree said “the housing market likely won’t crash”, because fundamentals like people being able to pay their mortgages should remain strong.

Supply issues are set to improve, as more people are vaccinated and return to work. This should apparently ease delays to the acquisition, production and transportation of finished goods and raw materials – putting downward pressure on goods like housing.

In terms of potential issues, the US mirrors the UK in that interest rates are likely to rise in order to curb inflation, so the cost of mortgages should rise.

However LendingTree said lower inflation should make buying goods and services easier.

The marketplace predicted typical mortgage interest rates to rise to nearly 4% by the end of 2022, while US GDP growth should be between 3 and 4%.

LendingTree said: “Based on our predictions for the year ahead, most people don’t need to worry drastically about the sky falling. But there are things to consider or keep an eye on as the year progresses.

“If you’re thinking about refinancing and haven’t done it yet, strongly consider it now. With mortgage rates already considerably higher than their pandemic lows, those looking to refinance their mortgage aren’t likely to see as much savings as they would have in most of 2020 and 2021. Nonetheless, rates remain below where they were before the pandemic, so homeowners have time to refinance to a relatively low rate. But that window of opportunity is rapidly shutting.

“Don’t be afraid of renting instead of buying. Even if more new construction and higher rates dampen home price growth this year, prices will remain unaffordable to many would-be buyers. That said, renting will likely remain considerably cheaper than buying and could be a good option for those priced out of their local markets.

“Be prepared for change. It’s no secret the economy has been incredibly volatile since the start of the pandemic. While 2022 is on track to be somewhat more stable than the past two years, there’s no guarantee it will be. People should be prepared to quickly react to sudden changes in the housing or jobs market. This could mean trying to set aside more money for an emergency or being ready to quickly snatch up a good deal on a home that just hit the market.”

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