NerdWallet 2022 Home Buyer Report

The U.S. economy — not to mention the pandemic-era world — has seen many ups and downs over the past several years, but the American dream of homeownership is steadfast: 83% of Americans say buying a home is a priority, and this rate has remained steady in our annual Home Buyer Report over the past four years.

One in 10, or nearly 26 million, Americans say they plan to purchase a home in the next 12 months, according to a new NerdWallet survey conducted online Dec. 7-9, 2021, by The Harris Poll. As with previous years, this hopeful sentiment is bound to end in disappointment for many, given that roughly 5 million to 6 million homes were sold in each of the past five years, on average, according to data from the National Association of Realtors.

This doesn’t mean people are completely unaware of the challenges they may face: 85% of Americans surveyed say homes currently for sale in the U.S. are overpriced. And the number of homes on the market is about half of what it was in 2019, according to NerdWallet’s analysis of Realtor.com data.

“Buying a home in 2022 will be a difficult thing to do,” says Holden Lewis, NerdWallet home and mortgages expert. “Would-be buyers still outnumber home sellers, so competition will be keen. Successful buyers will be the resilient people who persist despite setbacks.”

Some optimistic home shoppers will be disappointed in 2022. Roughly 26 million Americans say they plan to purchase a home within the next 12 months, according to the survey, though just 5 million to 6 million homes were sold in each of the past five years.

More are feeling better than worse about their ability to buy this year. About one-third (34%) of Americans say they feel better about their ability to purchase a home in 2022 compared with 2021, with personal finances such as more savings and more income as top reasons why in the survey. On the other hand, 25% of Americans say they feel worse, with many blaming broader economic factors such as higher home prices and potentially higher mortgage rates.

Many 2021 house hunters couldn’t close the deal. Two-thirds (66%) of Americans who began 2021 with plans to buy a home were unsuccessful, according to the survey. When asked why, the pandemic and related effects were the top-cited cause.

Fear of struggling to buy keeps potential sellers in place. Among current homeowners who would like to put their home on the market now, most (89%) say something is preventing them from listing, according to the survey. Four in 10 (40%) of those who want to put their homes on the market say concerns about finding a new house are preventing them from doing so, and 35% cite concerns about paying too much for a new house.

About one-third (34%) of Americans say they feel better about their overall ability to purchase a home in 2022, compared with 2021, regardless of whether they’re currently in the market. Many of those who cite this improved outlook point to their personal finances — 46% say they feel better because they’ll have more in savings in 2022, 40% because they’ll have more income and 32% because their credit score will be better, according to the survey.

Potentially reflecting disparate effects of the pandemic economy, 42% of men say they feel better about their ability to buy a home in 2022 compared with 2021, versus about one-fourth (26%) of women.

Millennials (ages 26-41) are more likely than other generations to say they feel better about their ability to buy a home in 2022 compared with 2021.

At the other end of the spectrum, those feeling pessimistic are more likely to cite the economy for their negative outlook. One-fourth (25%) of Americans say they feel worse about their ability to buy a home in 2022 compared with 2021. When asked why, 54% of those feeling worse say it’s because home prices will be higher, 45% because the economy will be worse and 31% because mortgage rates will be higher in 2022, the survey found.

Home buyer tip: Be realistic about your ability to buy, and understand it’s not only your personal finances that play a role in purchasing a home. The pandemic-era housing market will make finding and buying a home more difficult. Even if your credit is in good shape and you’ve amassed a healthy down payment, expect to see low supply and high demand push prices higher throughout 2022 in most areas. Steel yourself for the challenge by drawing clear boundaries before you begin house hunting: Set a firm and manageable budget and know what you’re not willing to compromise on should you get into a bidding war.

The 2021 market was crowded with buyers, in spite of high prices and a lack of homes to choose from. Millions braved the competition and won out, but not everyone had a success story. Two-thirds (66%) of Americans who started 2021 with a plan to purchase a home were unsuccessful. While this means about one-third (34%) bought a home or were in the process of doing so at the time of our survey, there are lessons for 2022’s homebuying hopefuls in the experiences of those who came up short.

Home buyer tip: Misconceptions about qualifying for a mortgage are common. While 16% of unsuccessful 2021 home buyers cited not being able to qualify for a mortgage, it’s possible some of them didn’t actually apply and merely assumed they would be denied. While good credit, a low debt-to-income ratio and a down payment are important, these things don’t have to be perfect. First-time home buyer programs and federally backed loans, such as those insured by the Federal Housing Administration or Department of Veterans Affairs, are just a few options that help prospective buyers make their homebuying dreams a reality, even with less-than-perfect credit or a smaller down payment.

“People with imperfect credit are more likely to qualify for loans backed by the FHA or VA,” Lewis says. “And VA loans don’t require a down payment, making them an excellent option for people who meet eligibility requirements.”

Nationwide, the number of homes on the market in any given month of 2021 was 56% lower than 2019 pre-pandemic levels, according to NerdWallet’s analysis of Realtor.com inventory data. It will take a consistent and considerable increase in the number of newly listed homes for home buyer choices to reach a reasonable level. And the survey suggests that current homeowners may be unlikely to list their homes in significant numbers.

More than 2 in 5 (42%) current homeowners don’t want to sell their homes right now. Of the 58% who do, 89% say something is preventing them from doing so.

Concerns about finding a new house (40%) and concerns about paying too much for a new house (35%) are among the most frequently cited obstacles, according to the survey. In a frustrating cycle, the fact that so few homes are available to buy is keeping many current homeowners from making their homes available to sell, which perpetuates the scarcity.

“The pace of home price increases is expected to slow dramatically in 2022,” Lewis says. “That might persuade at least some owners to list their homes for sale by giving them confidence that they’ll be able to find an affordable replacement home, whether they’re moving up or downsizing.”

Home buyer tip: Seven in 10 (70%) Americans believe first-time home buyers must be willing to buy starter homes or fixer-uppers if they want to buy a home in the current market. But flexibility will be crucial for all home buyers in 2022 — whether it’s their first home or a subsequent one. Although price growth is predicted to slow, a continued low inventory of homes will mean continued high prices and stiff competition. Buyers committed to closing on a home may want to expand their geographical search, let the seller choose the closing date and consider some home features as optional instead of must-have. One thing we don’t advise buyers to give up: getting a proper home inspection. In this market, you may not be able to get the seller to pay for repairs resulting from the inspection. But moving into a home without even knowing about potentially expensive problems could push a new homeowner’s budget to the breaking point.

Not everyone wants to buy a home — 16% of nonhomeowners and 37% of current homeowners don’t want to purchase a home at this time. But those who do cite a variety of obstacles.

Nonhomeowners are more likely to point to their personal finances: Not having enough for a down payment, low income and their credit score top the list of things preventing them from pursuing homeownership at this time. Current owners, on the other hand, are more likely to cite broad economic factors such as competition, the economy and a lack of homes within their budget.

Home buyer tip: Not having enough saved for a down payment is the most-cited obstacle to homebuying among nonhomeowners. In fact, if given the choice between receiving $80,000 toward a home down payment or toward their retirement fund, half (50%) of Americans would opt for a down payment. A big down payment can lower your monthly mortgage payment, reduce how much you pay in interest over the life of the loan and make you more competitive in the current market. But the days of the required 20% down payment are over, and low-down-payment mortgage options exist.

This survey of 2,035 U.S. adults ages 18 and older was conducted Dec. 7-9, 2021, online by The Harris Poll on behalf of NerdWallet. This online survey isn’t based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, contact Mauricio Guitron at [email protected].

NerdWallet defines generations as Generation Z, ages 18-25; millennials, ages 26-41; Generation X, ages 42-57; and baby boomers, ages 58-76.

Annual averages of active listings calculated from monthly national inventory data from Realtor.com.

The number of Americans planning on purchasing a home in the next 12 months was calculated using the U.S. Census Bureau’s adult population estimate as of July 1, 2021, the most recent available.