According to a recent article released by the National Association of Realtors, consumers can expect slower housing price appreciation, easing inflation and rising interest rates in 2022. This statement is based on the results of a survey of more than 20 top U.S. economic and housing experts, and Lawrence Yun, NAR chief economist and senior vice president of research, unveiled the consensus forecast today during NAR's third annual year-end Real Estate Forecast Summit.

For 2022, the group of experts predicted that annual median home prices will increase by 5.7%, inflation will rise 4% and the Federal Open Market Committee will twice increase the federal funds rate by 0.25%.

"Overall, survey participants believe we'll see the housing market and broader economy normalize next year," Yun said. "Though forecasted to rise 4%, inflation will decelerate after hefty gains in 2021, while home price increases are also expected to ease with an annual appreciation of less than 6%. Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve."

Yun forecasts U.S. GDP to grow at the typical historical pace of 2.5%, barring any major, widespread transmission of the omicron COVID-19 variant. He expects the 30-year fixed mortgage rate to increase to 3.5% as the Fed raises interest rates to control inflation but noted this is lower than the pre-pandemic rate of 4%.

The housing market performed better than it has in 15 years in 2021, with an estimated 6 million existing-home sales. As mortgage rates tick up slightly, Yun predicts existing-home sales will decline to 5.9 million in 2022. He also forecasts a modest increase in housing starts to 1.67 million as the pandemic's supply chain backlogs subside.

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.