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Will The Real Estate Market Get Affected By Fed Rate Hikes in 2022?- Expert Opinion

If you are looking to sell or buy a house soon, you will be interested to know more about the trends in the housing market. The predictions about the housing markets cannot be 100% accurate, just like the weather forecasts. But you can make some fair guesses about the future after looking at what the real estate experts are going by. And, one of the major factors is fed rate hikes in 2022. Will the real estate market get affected by fed rate hikes? Let us explore the possibility.

These forecasts are good if you need an idea of how the market will be in the future to buy or sell a house. But your decision to buy or sell a home should entirely be based on the finances you have or personal situations affecting you. Now let us see what the experts have predicted for 2022.

2022 – Housing Market Forecasts – Real Estate Market Get Affected by Fed Rate Hikes

2021 was a crazy time that saw insane house-selling behaviour. The sellers were getting offers of vast amounts over their asking price within a few hours, causing a lot of stress to the buyer and seller. But thankfully, we are out of such time with the market still strong. It is a good sign for the future.

Home prices in 2022

Like every market, the housing market also works on the factors of demand and supply. Even in 2022, there is still a shortage of homes for sale; therefore, the prices are still high. The median price was $360,000 in December 2021 and went up to $408,000 in May 2022.

A few months back, the prediction of home prices was 7.6% which now stands at around 10.8% for the year. It is a big jump, but these are just forecasts that can change daily. If the real estate market get affected by fed rate hikes then this can jump to unimaginable levels.

The home sales were very high in 2021, and the first few months of 2022 saw a sharp decline and behaved like the pre-pandemic time. The construction of new houses is significantly less and therefore the supply will be tight in future.

The effect of increasing interest rates

Interest rates are also an essential factor affecting the cost of homes. In 2021 the interest rates were the lowest ever, with just 3% for 30-year fixed-rate mortgages, which was predicted to increase to 3.6% in 2022.

As inflation increased, The Federal Reserve had to raise the benchmark interest rate to keep it in check. The Federal Reserve does not dictate the mortgage rates, but their corrective action does affect the interest rates. With rising inflation and increased Federal rates, the 30-year fixed-rate mortgage rate has increased to 5.7%. The overall rates are about 2% higher, meaning the new buyers have to pay extra interest to buy a house. These figures might change in the future, but according to experts, the second half of 2022 will see fewer homes for sale and a higher interest rate.

Housing demand in 2022 – The forecast

According to experts, the housing demand in 2022 will be more robust later. Even if the real estate market get affected by fed rate hikes the demand won’t be less. If we compare the number of buy offers the sellers received this year, they were fewer in May than in April, but still more than the pre-pandemic time. Though the demand is less because of the increased interest rates, the houses are still getting sold quickly.

The housing inventory forecast for 2022

The experts believe fewer houses will be on sale in the latter part of 2022. The estimated housing inventory in May was 1.15 million, which is about 4% less than last year. For the market to stabilize, this unsold inventory is expected to be around 2.3 million. Home buyers may have to wait a little longer to buy a home, but for sellers, without a doubt, it is a great time to sell a house.

The Sale of Houses – Will it Be slow?

The Sale of Houses - Will it Be slow?

The second half of 2022 will see housing getting sold at a faster rate although it is believed that if the real estate market get affected by fed rate hikes this can change. Last year the houses were getting sold in about 21 days, and time has gone down to just 16 days in 2022. It is indeed an excellent time for the sellers to sell homes fast. Since the market is challenging, the buyers should not wait longer if they find a house that fits their budget. So keep your bullet points ready for the home and grab your dream house that meets your requirement.

Is there a possibility of a market crash in 2022?

Looking at the current trends, experts are sure there are no chances of a market crash this year. With lending rules getting stricter, there are fewer chances of foreclosures too. As the supply of houses is less, which is expected to be the same in coming years, there is no possibility that the prices will drop sharply, resulting in a crash situation.

Read this before you buy a home in 2022.

Before buying a new home in 2022, you should go through this checklist. If you find that you have all the points checked, then it is the best time for you to buy a home rather than a rental home.

  1. You have the resources from which you can find the best property in the market to buy
  2. You can pay the down payment up to 20% of the total cost
  3. Mental preparedness
  4. Any debts to pay
  5. Enough emergency funds for up to 6 months available after buying the home

Financial stability is important

Do not let the market fluctuations hamper your decision to buy a home. But if you miss out on any of the above-mentioned conditions, you should not go forward with buying a house. Even if the market is down and property seems to be cheap. But if you are financially stable and assured about your career and income growth in the future, you should use the opportunity to buy cheaper homes in 2022.

So is 2022 a good time for home buyers?

So is 2022 a good time for home buyers?As the homes for sale are already in short supply, the competition to buy will be stiff, and the prices will continue to rise. Experts say that the inventory will be low for some time to come. While the homebuilders are convinced that 2022 will be a good year for business, buying a new house will not be easy. With the increasing government tariffs, high lumber prices, and shortage of supply chain, it would be difficult for the builder to build enough houses to meet the new demands.

The situation might worsen if the real estate market get affected by fed rate hikes. So if you are out to buy a home, there will be fewer options to choose from. You might even have to compromise on some of your wants.


The housing market fluctuations are very uncertain; it is hard to predict anything with certainty. If the real estate market get affected by fed rate hikes the fluctuation might be further prolonged to 2023. Having a real estate professional by your side is always helpful when buying or selling a house.