U.S. home prices soared at their highest rate on record last year. Most economists saw that price growth as simply unsustainable. Virtually every forecaster predicted home price growth would slow significantly this year.
But over the past few weeks, that consensus is no longer so unified. Now, more industry insiders are replacing previous forecasts with more bullish short-term outlooks. Indeed, some experts say the 2022 spring housing market might go down as one of the most competitive on record.
Look no further than Zillow for the change. Back in December, the home listing site predicted that U.S. home values would climb 11% this year. Economists at Zillow now say that forecast is too conservative. Their latest forecast finds home prices are set to spike 16.4% between December 2021 and December 2022. If Zillow is correct, it will mark another brutal year for home buyers.
Why are forecasters raising their home price growth forecasts? A lot of it boils down to housing inventory. Inventory plunged to a four-decade low as more buyers rushed into the market during the Pandemic and has gotten worse in recent months. From my personal experience, I feel the pain as I have out-of-state buyers lining up, but I have very little inventory to show them regardless of their housing preferences. With new construction timelines simply too far out for many buyers, it seems that prices of existing homes still have a long way to run before we see balance again.