Positive Shifts in U.S. Housing Market Expected: Insights from NAR Chief Economist Lawrence Yun

BOSTON, November 8, 2024 — At the 2024 NAR NXT, The REALTOR® Experience held in Boston, Massachusetts, National Association of Realtors (NAR) Chief Economist Lawrence Yun delivered an insightful analysis of the U.S. residential real estate market along with projections for 2025-2026.

During the Residential Economic Issues and Trends Forum, Yun provided a silver lining to the challenges faced over the past years in the housing market. "Despite a tough 2024 and a challenging 2023, there's a bright spot: household equity in real estate has soared to a record high, enriching homeowners significantly," Yun remarked. Homeowners now boast a median net worth of $415,000 compared to renters at just $10,000.

Yun highlighted the critical connection between employment and housing market health, noting the record-high payroll employment since the COVID-19 pandemic began as a key driver for potential home buyers. "Job stability enhances buying capacity, which is essential for home sales," he stated.

On the topic of mortgage rates, Yun shared his perspective amidst a political landscape marked by a second term for Donald Trump. "Reflecting back to the 4% mortgage rates during President Trump’s first term, we felt nostalgic. However, looking forward, we anticipate rates to stabilize around 6%, fluctuating between 5.5% and 6.5%," Yun explained.

Further, Yun advised on the timing of anticipated interest rate cuts, suggesting, "January would be a more strategic time for these adjustments than December." He predicts four rounds of rate cuts in 2025, addressing the current substantial budget deficit without an economic recession backdrop. "With ongoing tax cuts under President-elect Trump, fiscal strategies will be crucial in managing mortgage rates and the overall economy," he added.

Yun was optimistic about the housing supply, underscoring ongoing efforts to increase it. "We are committed to boosting supply through various advocacy efforts," he said.

Concluding his outlook, Yun projected a 10% increase in existing-home sales for 2025 and 2026, with new home sales expected to rise by 11% in 2025 and 8% in 2026. He also forecasts a 2% rise in median home prices for both years.

"Though the past years have been challenging, the improvements in job markets, stabilization of mortgage rates, and a possible easing of interest rates could mean that the worst is behind us," Yun expressed with cautious optimism.