The key in 2022 will be inventory. If inventory stays extremely low, there will be more housing starts and a larger increase in prices. However, if inventory increases significantly, there will be fewer starts and less price appreciation.
Towards the end of each year, I collect some housing forecasts for the following year.
For comparison, new home sales in 2021 will probably be around 785 thousand, down from 822 thousand in 2020, but up from 683 thousand in 2019.
Total housing starts will be around 1.58 million in 2021, up from 1.38 million in 2020, and up from 1.29 million in 2019.
Existing home sales will be around 6.1 million in 2021, up from 5.64 million in 2020, and 5.34 million in 2019.
For house prices, there is a very wide spread. As of August, Case-Shiller house prices were up 19.8% year-over-year.
The table below shows a few forecasts for 2022:
Note: Brad Hunter at Hunter Housing Economics has a great track record, and was kind enough to send me his forecast for 2022. He added on house prices:
Affordability is going to be the number-one topic in housing in 2022, as home prices put further pressure on prospective buyers’ ability to make a purchase. Even before mortgage rates get back above 4%, this will become a more pressing issue. As a result, the recent unsustainable rate of home price appreciation will slow sharply. It will feel like speeding in a car and then suddenly slowing down when you see the officer with the radar gun pointed at you. It will be a dramatic change in velocity. That being said, home prices will not decline on a macro basis, but they will simply rise at a more sustainable pace. This is not a bubble, but there is a high degree of FOMO (fear of missing out) adding to demand.
Here are links to the data: