How high will home prices go in 2022? CoreLogic's year-over-year forecast of 1.9% sounds good for homebuyers, but should raise some flags.
See our most recent article on home price growth forecasts here.
After a year of record gains, home price growth could pull back substantially over the next year.
Data and analytics company CoreLogic is forecasting 1.9% home price growth from September 2021 to September 2022, beginning with a 0.1% increase from September to October 2021.
The forecast represents a major shift from the 18% year-over-year increase from last September and 1.1% increase from August to September.
If accurate, CoreLogic’s forecast would provide relief to homebuyers -- especially first-time homebuyers -- sidelined by a seven-month streak of double-digit home price increases. However, it’s important to note that CoreLogic’s September home price prediction is substantially lower than forecasts from other housing authorities and its own forecast from August, which is shown in this chart.
Zillow is forecasting a much more gradual slowdown with home prices increasing 13.6% from September 2021 to September 2022. Goldman Sachs is even more bullish predicting 16% growth by the end of 2022.
Fannie Mae’s forecast is on the lower end with CoreLogic, but at 7.4% from Q42021 to Q42022 it’s still substantially greater.
With such a wide spread, it’s hard to know exactly what to expect from the housing market. However, it’s clear that home prices are expected to continue increasing in 2022. It’s just a matter of how much.
Geographically, home price gains were not spread evenly in 2021 and it’s likely they won’t be in 2022 either.
From September 2020-2021, 12 states experienced year-over-year price gains of 20% or more. The four states with the highest price increases were all in the Mountain West region, a result of migration from expensive coastal metros to more affordable inland areas.
“Remote work has allowed many employees to buy homes further away from their office,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “These homes are often in the suburbs or exurbs, where property prices and population density are lower and single-family detached housing more common.”
|State||Year-over-year change in home prices|
Unsurprisingly, Mountain West metro areas also led the way in price increases, with Phoenix topping the list at 31% year-over-year price growth.
|Metro area||Year-over-year change in home prices|
If home prices increase by just 1.9% nationally next year, as CoreLogic forecasts, then some markets are likely to see price declines. According to CoreLogic, metro areas in the Northeast are at the highest risk for price declines from September 2021 to September 2022.
|Metro area||Probability of price decline|
|Springfield, Mass.||Above 70%|
|Merced, Cali.||Above 70%|
|Norwich-New London, Conn.||50-75%|
CoreLogic’s home price forecast suggests a drastic slowdown after a year of record price run-ups. If it’s accurate, 2022 may be a much better year for homebuyers. However, since it is so much lower than other forecasts, it should be taken with caution.