Fannie Mae Increases Home Pricing Forecast – Here’s Why

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There seems to be no ceiling to how high home prices can go in the United States. Look no further than the latest data from Fannie Mae, which recently raised its home price forecast for 2022 even after prices have risen at record rates.

See: As Home Prices Reach 34-Year Record, Mortgage Rates Could Be Final Nail in Coffin for Some Homebuyers
Find: National Home Price Index: How Did the Predictions Hold Up From One Year to the Next?

Fannie Mae now estimates that the median U.S. home price in 2022 will climb 11.2% from a year ago to $384,000, Fortune reported. That’s well up from Fannie Mae’s earlier forecast of a 7.9% price increase.

Zillow sees even greater price appreciation this year, having recently revised its 2022 growth estimate to 17.2% from a previous estimate of 11%.

The good news is, the rate of growth might still decelerate in 2022 — but only because it’s almost impossible to keep pace with last year. As GOBankingRates previously reported, average home prices in the U.S. rose by 18.8% in 2021, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That was the biggest increase in 34 years of data and well above the 10.4% gain recorded in 2020.

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Even if prices rise 17,.2% this year, as Zillow predicts (for now), it would technically represent a deceleration. But it would also represent the second-fastest annual growth rate, behind 2021. That will be small comfort to home buyers who are already facing higher borrowing costs in 2022 as the Federal Reserve implements its plan to raise interest rates to combat inflation.

One reason home prices are surging is because of a shortage of available homes for sale as the construction industry battles a number of headwinds, including rising prices of raw materials, supply chain disruptions, and a shortage of workers.

If you’re a house hunter, about the best you can hope for now is that the combination of rising prices and higher mortgage rates will cause large numbers of other potential buyers to forego their plans until the market corrects itself. If that happens, price acceleration could slow to more normal levels.

See: Top 14 Home Repairs To Do To Avoid Failing Inspection
Find: 20 Home Renovations That Will Hurt Your Home’s Value

“The effect of buyers being priced out should mean fewer bidding wars and slower house price appreciation,” Fannie Mae economists wrote in their latest outlook.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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