As interest rates gradually rise from their current record lows, home purchases could do the same. According to the First American Real Estate House Price Index, November 2021 saw a home price appreciation of 21.5% and affordability decreased by 21%. Additionally, due to the Fed's tightening of monetary policy, it's likely that mortgage rates will increase by the end of 2022 leading to a decrease in consumer buying power.
Mark Fleming, chief economist at First American said that "While rates are expected to increase steadily throughout 2022, many potential home buyers may try to jump into the market now before rates rise further. The fear of missing out on low rates and the potential loss of house-buying power may supercharge the housing market ahead of the spring home-buying season."
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