2022 Fourth-Quarter Housing Market Trends: Prices Down, Rates Up


|10 min read

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It’s finally happened. Trends in the US housing market are responding to interest rate changes, and we are finally beginning to see home prices dip in many major metros.

Mortgage rates have now surpassed six percent, which is a rate many of us thought, or at least hoped, we would never see again. The Federal Reserve is hitting the economy hard. It was only a matter of time before we began to see its impacts on the housing market.

the real estate market is leaving houses for sale longer
Real estate for sale sign in residential neighborhood, New Jersey, USA

The real estate market is constantly changing. So if you’re considering entering the housing market, you must keep up with the latest trends. Trends are changing nearly weekly, so it’s essential to stay up-to-date with what’s happening in your area.

Let’s talk about what is happening in the housing market and what you need to know if you’re looking to buy property while prices remain low.

Q4 2022 Housing Market Trend Cool Down

Real estate trends and housing market predictions are consistent in that Q4 always slows down. Housing inventory tends to decrease as fewer properties come on the market, and many buyers choose to sit on the sidelines until the new year. Every year we see prices and housing supply begin to decline after a heightened summer market.

2022 Fall Dip and Higher Interest Rates

This year is no different, but it has been exacerbated by skyrocketing interest rates, unheard-of inflation, and a sharp decline in consumer confidence. Home prices are rising slower in some housing markets and declining in others. There are clear signs that the housing market has peaked.

Interest rates are having a massive impact on buyers borrowing ability. Consequently, the buyer pool is thinning out to a percentage of what it was at the start of the year.

With home buying backing off because of high mortgage rates, we see buyer demand decrease, which is changing what used to be a hot seller’s market into more of a stalemate. Home sales are down, forcing home owners who wish to sell to lower home prices. The price growth we got used to over the past few years may very well be no more.

Could Something Worse Be Next?

In addition, we’re all hearing scary reports on the news with the trigger word “recession” looming in the air. Housing market predictions use headlines like “US Home Prices Now Posting Biggest Monthly Drops Since 2009” and are fueling the fire despite the median home price still being up by over 12% from last August. The media influence is increasing buyers’ fears, and uncertainties will undoubtedly further dampen the housing market.

The housing market forecast feels bleak and many are questioning if a housing market crash is in our future.

But a decline in home prices isn’t bad news for everyone. Buyers who were priced out or frustrated by endless bidding wars are taking a second look at the market. In addition, many are willing to navigate higher interest mortgage rates with the hope of refinancing when rates drop.

With buyer competition decreasing and sellers fearing they’ve missed the peak of the market, housing inventory is increasing in some areas. Over the past two years, residential inventory has been astronomically low in most markets. This has caused housing demand to be higher than in recent history.

In March 2022, the National Association of Realtors reported only two months of seasonally adjusted supply of single-family homes. That’s far fewer than the three months reported in August 2022. Compared to August last year, housing inventory is up, and days on the market increased by 50%.

What Does this Mean For Home Buyers?

What this means for buyers is that they have time and can be a bit choosier with the properties they make offers on. Since the market began to tighten, homebuyers faced an uphill battle. The competition was fierce, and buyer anxiety was high. As a result, many buyers rushed into making offers, driven by the fear of being outbid and missing their chance.

However, things have started to shift in the housing market. Inventory is beginning to creep up, giving buyers more choices and breathing room. Prices are also starting to cool off as the market begins to regain some balance. As a result, buyers no longer need to rush into buying a home. Instead, they can take their time, shop around, and find the perfect home for their needs.

searching for homes and housing market trends on an ipad

Some Real Estate Housing Markets Trend Up

While we talk about real estate trends across the country taking a downwards turn, there are hundreds of markets across the country seeing positive trends. A recent Forbes article stated that 71 of the nation’s 100 largest housing markets remain strong. Many are still sellers’ markets with prices climbing and low housing supply, however slower than earlier in the year.

The regions that became overheated during the pandemic are experiencing the sharpest price drop. Among the cooling housing markets are San Francisco, Salt Lake City, Phoenix, San Diego, and Boise.

For investors, that means where they buy matters much more than in recent years. For homebuyers, that means that not all buyers should expect a deal in their target area. It’s essential to explore your local housing market trends. Home prices are still high in many areas, and rising mortgage rates aren’t scaring off all buyers.

While major western US metropolises are seeing price drops, others like Fayetteville and Cleveland have been extraordinarily resilient. What these markets all have in common is that they are some of the most affordable in the nation. They are cheaper to enter and, therefore, cheaper to finance.

Interest Rate Hikes Continue

What’s more dangerous to the economy than a housing market correction? Soaring inflation. The US annual inflation rate still hovered at 8.3% in August. With inflation remaining stubbornly high, the Federal Reserve plans to continue interest rate hikes throughout the year. At the end of September, the Fed announced another jumbo rate hike and said consumers should expect more to come.

Rising Interest Rates to Combat Inflation

The Fed aims to slow the economy into a “soft landing” by avoiding a recession. Whether or not they will be successful is hard to ascertain. But what we do know is that the mortgage market responds almost immediately to each rate increase. These rapid shifts make it increasingly challenging for buyers to qualify for large loans.

It’s impossible for high-interest rates not to have an impact on real estate trends and housing demand. To better understand how interest rates impact monthly payments, check out FastExpert’s mortgage calculator. Of course, only time can tell where the market will end up and when rates will start to come back down.

For now, persistent buyers who still want to explore the real estate market should reach out to their real estate agent and be on the hunt for deals. If you’re still looking to connect with the perfect agent, find top real estate agents in your area with FastExpert.

Housing Market Predictions and Forecast

Looking ahead to the rest of 2022 and 2023, it is difficult to predict what will happen with housing market prices. Various factors – from the pandemic to microeconomics – will play a role in determining how the housing market will fare in the coming years. Some experts believe that they will continue to rise at a steady pace, while others think that we may see another housing bubble.

The battle to control inflation will likely push interest rates higher, making it difficult for many to afford a new monthly payment. As this pushes mortgage demand lower, some experts believe home prices could continue to drop.

Likely, we won’t see much home price growth in the foreseeable future, and active listings will decrease as sellers decide to hold off.

Nationwide Home Prices

Most experts don’t expect a nationwide correction in housing prices, many markets are seeing their new normal. However, some markets could see as much as a 20% decline from their peak in recent times.


Keep watching the market and changes in mortgage rates. There will always be some buyers and sellers who benefit in times like these. And check back in for updates on what is happening in the current housing market.

Steph Matarazzo FastExpert Inc

Steph is the Marketing Director at FastExpert and has been working in the real estate data and research world for over three years. She is passionate about educating people on the real estate market and Excel spreadsheets. She lives on the East Coast with her family and recently purchased her own home.

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