The National Association of REALTORS® (NAR) recently released its housing market outlook, indicating a robust revival in home sales over the next two years, supported by an improving supply situation and stabilizing mortgage rates. Lawrence Yun, NAR’s Chief Economist, highlights a promising forecast for the U.S. housing market amidst ongoing economic adjustments.
According to the NAR forecast, a combination of lower mortgage rates and a strong labor market is expected to significantly boost housing demand. Yun anticipates that mortgage rates, which have been a critical factor in home affordability, will drop to around 6%. This decrease is expected due to predicted monetary policy adjustments, with four rounds of rate cuts likely by 2025. However, the decrease in rates may be tempered by the high U.S. budget deficit, which, if it leads to increased government borrowing, could limit the amount of money available for mortgages.
Despite these financial intricacies, the outlook for home sales is optimistic. NAR forecasts a 9.3% increase in existing home sales in 2025, followed by a 13% surge in 2026. Prices for existing homes are also expected to rise, with median prices projected to increase by 1.8% in 2025 and 2.3% in 2026.
The prognosis for new home sales is equally positive. The forecast predicts an 11% rise in new home sales in 2025 and an 8% increase in 2026. This growth is anticipated as builders respond to the prolonged period of underproduction relative to demand and begin to ramp up construction efforts to meet the growing needs of homebuyers.
This optimistic forecast could invigorate the U.S. housing market, which has experienced a period of sluggishness due to high mortgage rates and a tight supply of homes. The impending boost in home sales could have broad economic implications, potentially contributing to overall economic stability and growth.
Potential homebuyers might now find renewed confidence in entering the market, encouraged by the anticipated decrease in mortgage rates and ongoing stability in the job market. Moreover, current homeowners might consider selling their properties, motivated by rising home values and robust buyer demand, thus helping to alleviate some of the inventory shortages seen in recent years.
In summary, the NAR’s latest housing market outlook presents a buoyant future for the real estate market, underpinned by improving economic conditions and policy adjustments that favor lower mortgage rates and enhanced affordability. This setting promises a revitalization of the housing sector, which is crucial for the wider U.S. economy.
