As further interest rate hikes loom, appraisal demand is likely to remain tepid as lenders recalibrate, according to a new analysis from LightBox.

After a record-breaking 2021, appraisal volume remained high as 2022 began — but by midyear, the Fed's series of incremental rate hikes had shut some borrowers out of the market and some lenders began to pull back on commercial property lending. Overall, lenders' awarded appraisal fees peaked in the first quarter of 2022 but ended the year with the second-lowest quarterly volume in three years. And RFPs for appraisal projects "notably declined" after Q1, with awards in the fourth quarter reflecting the lowest quarterly volume of the year.

"As opportunities for appraisal projects began to decline, the response rate noticeably increased to its highest levels in two years," the report notes. "This trend reflects firms chasing a smaller universe of opportunities as competition for appraisal projects intensified."