Interest-rates alert from the NAR
National Association of Realtors Chief Economist Lawrence Yun forecasts that interest rates will fall in the long term, 2024 existing-home sales will rise to 4.46 million (up 9% from 4.09 million in 2023) and 2025 existing-home sales will increase to 5.05 million (up 13.2% from 2024) – with further gains in eight of the next 10 years – during the "Residential Economic Issues & Trends Forum” at NAR’s Realtors Legislative Meetings.
Yun also explained that rents will calm down further, which will hold down the consumer price index (CPI) and make the Federal Reserve cut interest rates.
Yun said that based on April’s employment data, there are six million more jobs compared to the pre-Covid highs, and jobs are boosting home prices.
“More jobs mean more home sales and higher housing demand,” said Yun. “You need a strong local economy for a strong housing market.”
Yun discussed the wealth comparison between homeowners and renters. In 2022, the median net worth of homeowners was $396,200, while the median net worth of renters was $10,400.
“The referral business is key,” Yun told a crowd of Realtors. “Your past clients are super happy in terms of their wealth gains. Seven percent mortgage rates are high compared to a couple of years ago, but you have to buy a home in order to build wealth. Have Americans lost the dream of homeownership? I don’t think so.”
Yun made several comparisons to 1995. The U.S. currently has 40 million more total payroll jobs and 70 million more people than in 1995. However, annual existing-home sales in 2023 experienced their worst year since 1995. So far in 2024, monthly existing-home sales rates have struggled to climb above last year’s level.
“How is it that home sales can be this low when we’ve got so many people living in this country?” asked Yun. “High mortgage rates and lack of inventory were a shock. Over the next 10 years, probably eight of those 10 years will improve for home sales.”
