Home Appreciation Projected to Remain Above 9.6% for 2022

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CoreLogic released its Home Price Index Forecast This Week in Real Estate that shows the 12-month growth steadily slowing over 2022. During the early months of the year, price appreciation is projected to remain above 10% while decelerating each month to a 12-month rise of 3.5% by December 2022, for an annual average of 9.6%. Below are a few newsworthy events from the first week of February that influence our business:

U.S. Home Price Insights. The CoreLogic Home Price Index (HPI™) is designed to provide an early indication of home price trends. Home prices nationwide, including distressed sales, increased year over year by 18.5% in December 2021 compared with December 2020. Consumer desire for homeownership against persistently low supply of for-sale homes created one of the hottest housing markets in decades in 2021 – and spurred record-breaking home price growth. Price appreciation averaged 15% for the full year of 2021, up from the 2020 full year average of 6%. Home price growth in 2021 started off at 10% in the first quarter, steadily increasing and ending the year with an increase of 18% for the fourth quarter. The CoreLogic HPI Forecast shows the national 12-month growth steadily slowing over 2022. During the early months of the year, it’s projected to remain above 10% while decelerating each month to a 12-month rise of 3.5% by December 2022. Comparing the average projected National HPI for 2022 with the previous year, the CoreLogic HPI Forecast shows the annual average up 9.6% in 2022. 

Mortgage Rates Hold Steady at 3.55%. The average 30-year-fixed rate mortgage remained flat for the third consecutive week at 3.55% for the week ending Feb. 3, reflecting the impacts of the Omicron variant in the economy, according to the latest Freddie Mac PMMS Mortgage Survey. “This stagnation reflects the economic impact of the Omicron variant of COVID-19, which we believe will subside in the coming months,” Sam Khater, Freddie Mac’s chief economist, said in a statement. Even though rates remained unchanged this week, most economists believe they will climb in the months ahead – but will still be close to record-low levels. The MBA forecasts that 30-year mortgage rates will reach 4% by the end of 2022. “As economic recovery continues going into the spring and summer, mortgage rates are expected to resume their upward trajectory. In the meantime, recent data suggests that homebuyer demand continues to be elevated as supply remains low, driving higher home prices,” Khater said. The Mortgage Bankers Association (MBA) showed on Tuesday that mortgage applications grew 12% for the week ending Jan. 28. The increase was buoyed by the trade group’s seasonally adjusted refinance index, which rose 18.4%. On the purchase front, the index was up 4% from the previous week.

Strong Job Gains in January. Despite the omicron surge, the U.S. job market experienced solid gains. Additionally, job gains in December and November were much stronger than initially estimated according to revisions of the establishment survey data. Construction industry employment (both residential and non-residential) totaled 7.5 million. Residential construction employment currently exceeds its level in February 2020. Meanwhile, the unemployment rate rose slightly by 0.1 percentage point to 4.0% in January. It was 10.7 percentage points lower than its recent high of 14.7% in April 2020 and 0.5 percentage points higher than the rate in February 2020. The labor force participation rate, the proportion of the population either looking for a job or already with a job, increased 0.3 percentage pints to 62.2% in January, showing more people are reentering the labor force. It is the highest level since March 2020.

Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate and Berkshire Hathaway HomeServices Real Estate Professionals is eligible to receive no-obligation home warranty coverage from American Home Shield or 2-10 Home Warranty the first six months the home is listed with our company?