Week of January 7, 2022

Experts: Housing Market Likely to ‘Normalize’ in 2022

While strong homebuyer demand and inventory shortages will continue into 2022, the housing market is unlikely to repeat this year’s dizzying heights, in which existing-home sales reached their highest point in 15 years with an estimated 6 million sales. Slower growth in home prices, decelerating inflation, and multiple interest rate hikes by the Federal Reserve could contribute to a more normal housing market in the new year, National Association of REALTORS® Chief Economist Lawrence Yun said Wednesday during NAR’s virtual Real Estate Forecast Summit. Read more from NAR's Realtor Magazine.

Though Slowing at Year End, Purchase Applications Set Record

The Mortgage Bankers Association (MBA) closed, as they usually do, for the two-week holiday period. Its weekly report on mortgage application volume covers those two weeks with an adjustment to account for the holidays.

MBA’s Market Composite Index for the week ended December 30 decreased 2.7 percent on a seasonally adjusted basis compared to the December 17 reporting period. On an unadjusted basis, the Index was down 32 percent. Read more from Mortgage News Daily.

Expect an Unseasonably Hot Winter for Home Sales

This winter is expected to be unseasonably hot for the housing market.

“Compared to other past winter seasons, this winter season’s sales activity will be stronger,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “This winter, there will be more sales compared to pre-pandemic winters going back all the way to 2006.”

The momentum from the last few months is expected to continue. From March through October, homes have been selling faster than they traditionally do. Read more from NAR's Realtor Magazine.

Omicron Not Scaring Off Home Buyers

The latest COVID-19 variant is prompting a wave of new infections—more than 1 million daily cases were reported on Monday alone. Omicron is also the most contagious variant yet. But housing analysts don’t believe omicron will hamper the housing market and deter buyers and sellers—at least it doesn’t done that so far, observers say.

Housing analysts acknowledge they were concerned as the new strain reached the U.S. in November and then saw a dip in new listings in December 2021, realtor.com says. But George Ratiu, manager of economic research at realtor.com, says he sees those events as a coincidence that reinforced the seasonal trend of slower sales. Read more from NAR's Realtor Magazine

Price Gains Slow; Will We See 7% This Year?

Home price gains slowed slightly in October with both S&P CoreLogic Case-Shiller and the Federal Housing Finance Agency (FHFA) reporting lower annual increases in October than in September. There was a slight uptick, however, in the monthly gain in FHFA's House Price Index (HPI).

The Case Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, rose 19.1 percent on an annual basis in October. The annual gain in September was 19.7 percent. Read more from Mortgage News Daily.

Homeownership Still More Affordable Than Renting

Home prices may be growing faster than rents in most places across the country, but homeownership still beats renting financially, shows a new study from ATTOM Data Solutions, a real estate data firm. Owning a median-priced home is more affordable than the average rent of a three-bedroom property in 58% of 1,154 counties tracked in the report.

Researchers analyzed fair market rent data estimates for 2022, wage data, and public record sales deed data for single-family home sales in the counties tracked. Read more from NAR's Realtor Magazine.

Mortgage Market Update

Mortgage rates increased during the first week of 2022 to the highest level since May 2020 and are more than half a percent higher than January 2021. With higher inflation, promising economic growth and a tight labor market, we expect rates will continue to rise. The impact of higher rates on purchase demand remains modest so far given the current first-time homebuyer growth.


We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us.


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Information and analysis is obtained through third parties and is deemed accurate but not guaranteed. Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Dept. of Banking and Securities, NJ Dept. of Banking & Insurance, the state of DE, the Florida Office of Financial Regulation, MD Mortgage Lender #23004 and VA State Corporation Commission #MC - 6797. NMLS #128570.