Home-price growth could slow by the end of 2022, despite the housing market breaking records in January.

While home-price growth has been in double digits since the summer of 2020, a new forecast from Redfin is expecting that to change in the new year. 

The forecast expects home sales to remain flat throughout 2022, as they have been due to the continuing inventory shortage. Additionally, Redfin expects mortgage rates to increase, predicting the 30-year fixed mortgage will rise to 3.9%. 

Redfin deputy chief economist Taylor Marr says even though the price of buying a home has never been higher, the demand is only growing stronger. 

“Some of that demand may be a reflection of buyers’ urgency to get ahead of rising rates, leaving a lot of uncertainty about how strong home sales will be in 2022,” Marr said in a press release. “Nonetheless, the ongoing supply and demand imbalance is pushing home prices up and up because there are enough eager buyers to rapidly buy up nearly every home that hits the market. By this summer, higher prices and rates may cause buyers to pull back from the market.”

Pending home sales had their largest decline since June 2020 last month. They fell 2% in the four weeks ended Jan. 20. Lack of inventory is causing sales activity to stall, according to Redfin, the number of homes listed a year ago was 11% higher. Active listings also declined last month as they hit an all-time low, falling 29%.

Through it all, housing demand remains strong. The report found pending sales were up 38% from two years ago just before the start of the pandemic, as they continue to sell quickly even though the prices are higher than ever. 

During the four weeks ended Jan. 30, the median price of homes in the U.S. was up 14% year over year to $354,750. The median asking price of newly listed homes also rose 14% to $369,975, an all-time high, according to the report. 

Redfin said 40% of all homes went under contract with an accepted offer within one week of being listed, up from 34% a year before 27% from 2020. The report said this was the highest level ever for January and highest since May. 

Additionally, the report noted a 4% week-over-week increase in mortgage applications during the week ended Jan. 28. Thirty-year mortgage rates were flat at 3.55%, the highest since March 2020.