After almost two years of double-digit increases, many experts
thought home price appreciation would decelerate or happen at a slower
pace in the last quarter of 2021. However, the latest Home Price Insights Report from CoreLogic
indicates while prices may have plateaued, appreciation has definitely
not slowed. The following graph shows year-over-year appreciation
throughout 2021. December data has not yet been released.
As the graph shows, appreciation has remained steady at around 18% over the last five months.
In addition, the latest S&P Case-Shiller Price Index and the FHFA Price Index
show a slight deceleration from the same time last year – it's just not
at the level that was expected. However, they also both indicate
there’s continued strong price growth throughout the country. FHFA
reports all nine regions of the country still experienced double-digit
appreciation. The Case-Shiller 20-City Index reveals all 20 metros had double-digit appreciation.
Why Haven’t We Seen the Deeper Deceleration Many Expected?
Experts had projected the supply of housing inventory would increase
in the last half of 2021 and buyer demand would decrease, as it
historically does later in the year. Since all pricing is subject to
supply and demand, it seemed that appreciation would wane under those
however, did not slow as much as expected, and the number of listings
available for sale dropped instead of improved. The graph below uses data from realtor.com to show the number of available listings for sale each month, including the decline in listings at the end of the year.
Here are three reasons why the number of active listings didn’t increase as expected:
1. There hasn’t been a surge of foreclosures as the forbearance program comes to an end.
3. Many believed more sellers would put their houses on the market
once the concerns about the pandemic began to ease. However, those
concerns have not yet disappeared. A recent article published by com explains:
“Before the omicron
variant of COVID-19 appeared on the scene, the 2021 housing market was
rebounding healthily from previous waves of the pandemic and turned
downright bullish as the end of the year approached. . . . And then the
new omicron strain hit in November, followed by a December dip in new
listings. Was this sudden drop due to omicron, or just the typical
holiday season lull?”
No one knows for sure, but it does seem possible.
Home price appreciation might slow (or decelerate) in 2022. However,
based on supply and demand, you shouldn’t expect the deceleration to be
swift or deep.