The chief economist for the National Association of REALTORS® (NAR) expects interest rates to drop and home sales to pick up during the rest of the year and into 2025.
Lawrence Yun shared his outlook this week during NAR’s REALTORS® Legislative Meetings in Washington, D.C. He projected existing home sales to increase to 4.46 million nationwide, a 9% increase from 4.09 million in 2023. He also predicted existing home sales to jump to more than 5 million in 2025 and show gains in eight of the next 10 years.
Yun pointed to April employment data, which showed 6 million more jobs than pre-COVID highs. Those job numbers, he said, 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 compared the current market to 1995, noting that the U.S. has 70 million more people and 40 million more payroll jobs than the mid-1990s, but home sales continue to lag at their lowest levels since 1995.
“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.”
He reminded Realtors that referrals will be essential as market gridlock loosens.
“The referral business is key,” he said. “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 still expects interest rate cuts, even though the Federal Reserve has yet to take that step. The full cuts that were expected for 2024 could be delayed, in part, to 2025, he said.
“The Federal Reserve has delayed rate cuts,” Yun said. “I would have thought that, by now, rates would be lower and rate cuts would have begun. Whatever rate cut the Federal Reserve does not do this year will simply get pushed back to 2025. They’re calling for a September rate cut, but we’ll see.”