Utah Housing Market Update: How did the housing market perform in the first quarter of 2022?
1. Home Sales
Home sales have remained competitive in the U.S housing market, though it is not expected that this year’s housing market will exceed performance in 2021, it is apparent that sales drop is healthier than 2006. Experts even expect that the housing sector’s success in 2021 will continue in 2022 and will remain strong in the coming years as home inventory slowly copes with demand. Moreover, as stated from an article of The Washington Post
“NAR surveyed more than 20 economic and housing experts to gauge their expectations of home-price growth, new-home sales and existing-home sales for 2022… New-home sales are forecast to rise to 920,000 in 2022, up from last year, which is expected to have had about 800,000 new-home sales. Existing-home sales are anticipated to dip to 5.9 million, down from last year, which is expected to have had about 6 million sales of existing homes.”
2. Home Prices
Home prices on the other hand have continued to rise, this is good news for existing homeowners as this is a great time to put up your property when the market is at its most competitive prices. This is primarily due to a shortage of inventory that has created a red-hot housing market, with homes selling so quickly after being listed.
3. Home Inventory
Annual months supply of inventory significantly decreased in 2021. That was primarily due to low mortgage rates resulting in high demand in the market. However, with rising interest rates demand is expected to drop slightly while inventory is expected to steadily increase in the coming years that will hopefully lead to a more balanced market.
4. Mortgage rates
At the end of the first quarter of 2022, mortgage rates were at 4.17%, and so far in this quarter we have already seen them raise another 1%. Historical average however is at 7.81%. This means that at these rates, we are still considerably low and that buying your property at these conditions is still in your favor. Mortgage rates in the coming weeks are still expected to slowly rise, remember that with every 1% increase in mortgage rates 18% of potential buyers are priced out of the market. Also with every 1% increase in mortgage rates as a buyer you lose 10% of your purchase power.
Affordability will continue to be a challenge as home prices continue to rise. Chief economist at the real estate listings website Danielle Hale stated that, “Home buyers will have a better chance to find homes in 2022 but will face a competitive seller’s market”
On the other hand she also says, “…sales of existing homes will rise 6.6 percent. She expects 2022 to have the second-highest sales in the past 15 years, surpassed only by 2021.” Even if affordability seems to be a challenge in this current market, demand for homes seem to cope with these conditions and that 2022 home sales will not significantly decrease from the historic run of 2021.
The housing market in 2022 is in its healthy retracement period after an all time high run from 2021. One thing to keep in mind is that we are still in a heavily favored sellers market, however not as much as its run in 2021 but still significantly higher than the latter years. This is proof of the strength of real estate market amidst the challenges it may face. With home inventory slowly coping up with demand, we can see a much more balanced market in the coming years.