NAR predicts stable home sales ahead
The outlook for residential housing looks promising, according to National Association of Realtors (NAR) Chief Economist Lawrence Yun.
“All markets are seeing strong conditions and home sales are the best they have been in 15 years, Yun said. “The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.”
The economist delivered his assessment at the National Association of Realtors’ 2021 Realtors Conference and Expo in San Diego, Calif.
An unknown, he said, is how remote work opportunities will play out in the future and advised that the industry keep that in mind.
“We are only in the first innings of work-from-home options,” Yun said. “People have not fully digested the work-from-home-flexibility model yet in determining home size and locational choice.”
While there might be a decline in home sales in 2022, Yun still forecasts sales will outdo pre-pandemic levels. His prediction is based on an anticipation of more inventory in the coming months. That supply will be generated, in part, from new housing construction – already underway – as well as from the conclusion of the mortgage forbearance program, which in turn will cause a number of homeowners to sell.
“With more housing inventory to hit the market, the intense multiple offers will start to ease,” Yun said. “Home prices will continue to rise but at a slower pace.”
Yun noted that some areas in the nation are thriving and are already fully recovered. This is the case for the respective job markets in places like Idaho and Utah. Both states have reported currently having more jobs now than the beginning of the pandemic.
While real estate has thrived, Yun says there are signs that a more normal and predictable market is on the horizon.
Home sales have surged over the past year in an uncharacteristic manner, many receiving multiple bids after only being on the market for a short period. However, the housing sector will settle down but at above pre-pandemic levels.
Yun projected that mortgage rates, which are currently at 3%, will see an increase of 3.7% in the coming months, a rise he attributes to persistent high inflation. Home prices rose by 12% on average in 2020 and 2021, while inflation rose 3%.
“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”