Get Ready For A Housing Surge – NAR Chief Economist Forecasts Major Sales Growth And Steady Rates

According to National Association of Realtors Chief Economist Lawrence Yun, the U.S. housing market is showing signs of improvement.

Yun believes that the worst housing inventory shortage is easing, mortgage rates are stabilizing and job growth remains strong.

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"Over the years, you see your past clients doing well because they're homeowners," Yun said during the Residential Economic Issues and Trends Forum at 2024 NAR NXT, The REALTOR Experience, in Boston. "There's an intangible value that [Realtors] provide."

"2024 has been a very difficult year on many fronts. We did not get the home sales recovery this year after an awful 2023," he added.

Yun also noted a significant increase in household equity in real estate, reaching record-high levels. The wealth surge benefits past real estate agent clients and totals $35 trillion.

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The stark contrast between the estimated median net worth of homeowners ($415,000) and renters ($10,000) in 2024 underscores the substantial advantage of homeownership.

"Homeowners' wealth steadily rises while renters' wealth does not," Yun said. "If you don't enter the housing market, you are in the renter class where wealth is not being accumulated. If you want to participate in the housing market, the sooner you get in, the sooner you accumulate wealth."

Yun expressed concern about the low homeownership rate among younger Americans and the challenges faced by first-time homebuyers entering the market.

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He noted that the U.S. has experienced record-high payroll employment since the onset of the COVID-19 pandemic in March 2020 and emphasized the correlation between employment and homeownership.

"When more people work, they have the capacity or are in a better position to buy a home," he said.

Home sales are primarily influenced by job growth and mortgage rates and Yun said he is optimistic about the stock market's positive performance.

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Yun discussed the outlook for mortgage rates under a second Donald Trump presidency. During Trump's first term, mortgage rates were at 4%, but they are unlikely to return to that level. He said it's more likely that mortgage rates will go back to 6%, with 5.5% to 6.5% becoming the new normal.

He projected six to eight additional interest rate cuts and suggested that Federal Reserve Chair Jerome Powell make the first cut in January instead of December.

Yun also predicted four rate cuts in 2025 and commented on the ongoing budget deficit.

"Today, we have a massive budget deficit at a time when we are not in an economic recession," Yun said. "Clearly, president-elect Trump will not stop tax cuts – he will extend or expand them."

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