
New home sales, as well as the average price of a home, are expected to see an increase next year, following on the heels of two years of uneven growth.
So said Lawrence Yun, chief economist of the National Association of Realtors, in comments delivered during the association’s Residential Economic Issues and Trends Forum in Boston.
Yun remarked that, for the most part, 2024 has been a “very difficult year on many fronts. We did not get the home sales recovery this year after an awful 2023.”
For all of that, household equity in real estate is now at a record high, even as an increasing number of renters are finding it difficult to get into the home-buying market.
“Homeowners’ wealth steadily rises, while renters’ wealth does not,” noted Yun.
“If you don’t enter the housing market, you are in the renter class where wealth is not being accumulated,” continued the economist. “If you want to participate in the housing market, the sooner you get in, the sooner you accumulate wealth.”
Meanwhile, there’s the question of mortgage rates: Yun noted that those rates during the four years of the first Trump administration had been generally steady at 4%.
“Are we going back to 4%?” asked Yun. “Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%. That will be the new normal, bouncing around 5.5% to 6.5%.”
Anticipating up to eight more interest rate cuts in 2025, Yun said he hoped the Federal Reserve would implement those cuts sooner rather than later in the year.
Mortgage funding in the coming year is also expected to be less available, said Yun, “because the government is borrowing so much money.”
But Yun was quick to add that if the incoming Trump administration can submit a workable plan to Congress reducing the budget deficit, “then mortgage rates can move downward.”
Good news for realtors: Yun forecasts an 11% increase in home sales for 2025, with a 2% increase in the median price of a home.
November 12, 2024
By Garry Boulard
Photo Courtesy of National Association of Realtors