Where do we go from here? Every leading real estate forecast modelreviewed by Fortune predicts this home price growth deceleration—which started in September—will continue in 2022. The most bullish outlook comes from Zillow, which predicts home prices will jump 11% this year. Fannie Mae and Freddie Mac say home prices will jump 8.4% and 6%, respectively, in 2022. While that’s lower than the 18.8% we’ve seen over the most recent 12-month period, it’s still above the average rate of appreciation (4.6%) home prices have gone up annually since 1980.
But not all forecasters are calling for strong appreciation levels this year. For the coming 12 months, Redfin says home prices will climb 3%. That’s pretty close to the forecast price growth rates by Realtor.com (2.9%) and CoreLogic (2.8%). Meanwhile, the Mortgage Bankers Association has the lowest 2022 price growth forecast—predicting median existing home prices will rise just 2.3% this year.
Even if the rate of price growth continues to decelerate, it doesn’t mean home shoppers will get any relief on the cost front. The underlying reason these forecast models predict price growth will slow in 2022 isn’t just because they’re predicting the housing market will cool down a bit. It can also be attributed to the expectation that mortgage rates will shoot up this year as the Federal Reserve works to tame inflation. As mortgage rates rise, so do monthly mortgage payments and the ability for homebuyers to bid up prices. Essentially, it’s a wash: The savings from reduced home price growth gets canceled out by the increased mortgage payments.