While the number of available houses for sale will remain very low in the year 2022, a rising demand for homes will likely keep prices up. The supply-demand dynamic will continue to favor sellers, and buyers will continue to face many challenges. A buyer's market exists when the number of homes for sale is six months or more. In contrast, a seller's market is when there are fewer than six months of available inventory. According to NAR data, the country had 2.4 months of available inventory in September 2022.
In the coming year, a slightly cooler market is expected. Zillow economists don't expect a buyers' market to emerge, but predict that a number of market forces will continue to favor sellers. The tight supply of new homes due to years of underbuilding, the increasing number of millennials, and the demographics of the U.S. will all continue to push prices up. Additionally, the lack of new construction will likely create a buyer's market, allowing buyers to focus on the suburbs. This should encourage mortgage refinancing, which will save buyers money.
Another factor that will continue to make buying a home affordable is the millennial population. Those in the prime homebuying years are more likely to have large families. While housing inventories will remain low and new construction will not keep up with demand, the current low interest rates will be a big factor in luring buyers to purchase a home. As a result, many homebuyers will be looking to relocate to the suburbs or cheaper metro areas.
In the coming years, Zillow economists predict that the market will cool slightly but will remain a buyers' market for the next year. This is because many of the forces that have been favoring sellers for the past year will continue to remain in effect. In addition, historically low mortgage rates and millennials will continue to drive demand, which will continue to make homebuying more expensive for many people. In the meantime, rental prices will stay high, and buyers will continue to seek out affordable housing.
The rising cost of housing and the low supply of available homes will continue to limit the homebuying market. In this climate, millennials will be the main demographic driving homebuying trends in the next year. For many, a homebuying trend that will favor sellers is still in place, even if a buyer's market continues to be less competitive. Nonetheless, the rising cost of housing is a challenge, but a high-quality home is a key factor for attracting a buyer.
Despite the recent slowdown in the housing market, millennials will continue to be the largest segment of new homebuyers, with a majority of the new generation entering the market at an accelerated rate. In the meantime, millennials will continue to become the majority of homebuyers in the U.S. during the next two years, and their number will only continue to grow. This means that the homebuying market will remain at a steady pace until 2022.
Message has been sent!