Whether the current housing prices will continue into near double-digit territory next year or there will be a "significant slowdown" depends on the analysis.
National Mortgage News recently reported that a "significant slowdown in home price growth" is forecast for 2022 while the American Enterprise Institute (AEI) analyst who accurately predicted the ongoing housing boom suggests otherwise.
"Prospective sales currently are down from their peak in June, but that doesn't mean the market is cooling," AEI Housing Center Director and former Fannie Mae Chief Credit Officer Ed Pinto recently told Forbes.
"Buyers need to close by the end of the summer to get their kids in a new school," Pinto said in a Forbes story published Monday, Nov. 1. "So, they need to sign a contract and secure a mortgage by June. That's when we see always see peak purchase volumes as measured by number of new home loans."
What matters more is that purchase volumes "are extremely high" right now, and that it's important to get past COVID-induced distortions and compare what's happening now with what was happening during this period in 2019, Pinto said.
"2019 was a strong year," Pinto said. "The consistent message is that week by week the buying activity is well above the numbers of 2019, which means that 2021 is a really strong."
Pinto predicted that home prices will continue to rise at or near double digits into 2022.
Strong Home Mortgage, headquartered in Manassas, Va., agrees with a gloomier prediction.
"Significant Slowdown in Home Price Growth Forecasted for 2022," Strong Home Mortgage said in a Tuesday, Nov. 2 Twitter post.
Strong Home Mortgage's Twitter post linked to a National Mortgage News report that warned of a 'significant slowdown' in the growth of home prices next year.
The National Mortgage News report referred to CoreLogic warnings that the nation's annual home price growth reached 18% in September while supply-and-demand imbalances intensified. Those imbalances for entry-level homes, in particular, are pushing would-be first-time buyers out of the market.
In CoreLogic's assessment, COVID-induced distortions aren't something to get past but, instead, require close attention.
"The pandemic led prospective buyers to seek detached homes in communities with lower population density, such as suburbs and exurbs," CoreLogic President and CEO Frank Martell said. "As we head into 2022, we expect some moderation in the current pattern of flight away from urban cores as the pandemic wanes."
Meanwhile, the Home Buying Institute also expects home prices to slow down next year. Some of this year's hottest housing markets had been in Austin, Boise and Phoenix, with median values rising more than 30% in 12 months but firms such as Freddie Mac and Zillow, in addition to CoreLogic, are predicting a slowdown next year, according to the institute's report issued Wednesday, Nov. 3.
