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NAR Forecast: Existing Home Sales on the Rise by Next Spring

During a panel at the National Association of Realtors (NAR) 2023 NTX Realtor Experience Conference in Anaheim, California, the NAR’s Chief Economist Lawrence Yun talked about the current state of the real estate market and his predictions on the short-term outlook of the market. 

He explained that high mortgage rates and low inventory have dominated 2023, saying, “Twenty-year-high mortgage rates have held off home buyers. There’s also a lack of housing inventory to sell, which means fewer opportunities for sales in the marketplace.” 

Yun continued by saying that home sales will likely decline by 18% this year, compounding a 17% reduction last year. Driven by extraordinarily high interest rates, 30-year-fixed mortgage rates remained elevated in 2023, climbing to as much as 8%. 

“These high interest rates have had a great impact on the U.S.’ overall economic performance,” Yun said. 

Yun referenced the latest GDP figure, which grew by 4.9%, but warned, “Statistically, this is much better than the historical average, but if we look at this component, there are some worrying signs in the economy.” The first being that business spending is essentially flat. The second is that goods inventory is rising, meaning products are being produced but not getting sold. 

“We cannot keep adding to the shelves,” said Yun. “Just like in housing, businesses have to borrow money, and business spending is down because it’s more expensive to borrow.” 

Yun also addressed jobs, stating, “We are on the positive side of jobs data, but each passing month shows diminishing strength. Based on the trendline, employment could become negative. The upcoming GDP number looks to be worrisome.” 

He also told the audience that as of this morning, the consumer price index (CPI) is much calmer, indicating that the Federal Reserve should adjust its monetary tightening posture. 

“The 10-year Treasury yield is at 4.4%, which historically means mortgage rates could be at 6.4%, but they are much higher,” said Yun. “The bond market is forcing the Fed to pivot.” 

Yun also discussed high home prices, saying: “Lack of inventory is providing the support for high prices, but it’s also making it super difficult for first-time buyers to enter the housing market.” 

Yun said the 30-year mortgage and Fed funds rates have likely crested. 

“I believe we’ve already reached the peak in terms of interest rates,” Yun said. “The question is when are rates going to come down?” 

Yun forecasts that interest rates will drop to between 6-7% by the spring buying season and anticipates that more sellers will enter the market. 

“Builders are back on their feet, up 5% in newly constructed home sales year to date,” said Yun. “Builders can simply create inventory. In a housing shortage environment, builders are really benefiting.” 

He explained NAR’s advocacy efforts are working to help create inventory, but it will take time. 

“Pent-up sellers cannot wait any longer. People will begin to say, ‘life goes on,’” said Yun. “Listings will steadily show up, and new home sales will continue to do well. Existing home sales will rise by 15% next year.” 

Yun also said that international buyers have declined, but once they return to the market, there will be a boost in buying. 

He reiterated the value of homeownership, stating, “Consumers are happy with real estate service. The market is fiercely competitive with so many business models among which to choose—from do it yourselfers to iBuyers to discount brokerages, to full service and rebates. American home buyers have benefited immensely from such wide-ranging choices in real estate services. Moreover, homeowners have accumulated sizable wealth over time.” 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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