This hot housing market isn't over yet. At least that is what Zillow predicts in its final 2022 forecast.
Over the next 12 months, Zillow foresees U.S. home prices rising 11% overall. While that would mark a slowdown from the 19.5% jump over the most recently measured 12-month window (between September 2020 and September 2021), the predicted price increase would still be a housing market that strongly favors sellers. For perspective, Fortune calculates the average rate of home price growth per year has been 4.6% since 1980.
"The housing market may not reach the incredible heights of 2021, but we expect it will be anything but slow next year. Expect the strong seller’s market to persist, the Sun Belt to maintain its top spot as the most in-demand region, and flexible work options to continue to shape housing decisions in new ways in 2022," writes the Zillow research team in the latest report.
Zillow's bullish prediction is a bit watered down from its previous 2022 forecast. Back in November, Zillow released a forecast model that predicted U.S. home prices would jump 13.6% in 2022. Why did the real estate listing site cut its price growth forecast by 2.6 percentage points? A lot of it boils down to mortgage rate uncertainty. Stubbornly high inflation—the highest in nearly four decades—is making it more likely the Federal Reserve will increase interest rates next year. If the current average 30-year fixed mortgage rate (3.1%) were to rise significantly, it could push some buyers out of the market.