It's fair to say that 2021 was an interesting year for real estate, and 2022 is shaping up to be similar. Now in the absence of a crystal ball, it's impossible to say what's in store for the housing market in February, but here are a few predictions based on recent trends.

1. Mortgage rates will keep rising

Mortgage rates sat at higher levels during January 2022 than they did at any point in 2021. And based on that upward trajectory, there's reason to believe that rates will continue to rise in February, albeit perhaps at a slower pace than January.

A big reason we can continue to anticipate rate hikes is that the Federal Reserve has plans to raise its interest rates. And while the Fed doesn't set mortgage rates (or any consumer interest rates, for that matter), its actions can influence them. Furthermore, rates were sitting at extremely low levels from mid-2020 through the start of 2022. And so frankly, we've been due for an uptick.

A person at a desk holding a pen.

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2. Housing inventory will remain low

As of the end of December, the U.S. housing market had a 1.8-month supply of available homes, as per the National Association of Realtors (NAR). For context, it takes a 4- to 6-month supply of homes to create a balanced housing market, as opposed to today's market, where sellers clearly have the upper hand.

Because home listings tend to be sluggish during the winter months, we shouldn't expect a notable increase in inventory in February. If anything, inventory levels might shrink as buyers rush to purchase homes before mortgage rates climb even higher.

3. Home prices will remain elevated

In December, the median price of an existing home rose to $358,000, representing a 15.8% increase from the year prior as per the NAR. Until more inventory hits the residential real estate market, we can expect home prices to remain elevated.

Any time there's a situation where demand heavily exceeds supply, prices are apt to be high. And due to a lack of competition, there's no reason for today's sellers to be motivated to come down on price.

Will February be a good month to buy a home?

Probably not. Due to the above challenges, everyday buyers and real estate investors alike might struggle with limited inventory and inflated home prices. And with mortgage rates climbing higher, there's actually less incentive for buyers to rush to own residential real estate right now.

That could, however, end up being a good thing for the market. If buyer demand starts to wane, home prices could start dropping as the year progresses.

Still, today's circumstances are tough for real estate investors in particular who want to scoop up income properties to capitalize on the current boom in rental demand. The same holds true for those hoping to add another vacation rental to their portfolios in time for the summer rush. All told, investors and regular buyers alike will have to make a tough choice this month -- pay a premium for an existing home without a ton of mortgage savings to offset higher prices, or put their plans on hold and hope market conditions become more favorable as 2022 moves along.