Lawrence Yun, NAR NXT, Boston, Mass., Nov. 8, 2024.
Photo: AJ LaTrace

NAR economist bullish on home sales rebound in 2025 

Yun expects existing sales to rise 9% next year and even more in 2026, though the market has proved difficult to predict in recent years.

November 9, 2024
3 minutes

BOSTON, Mass. — A year ago, the chief economist for the National Association of Realtors predicted a rebound in 2024. It never materialized, but he now thinks that after more than two years of sluggish sales, the housing market is (finally) primed for a recovery.

Speaking from the stage at the association's annual NAR NXT conference on Nov. 8, Lawrence Yun forecast a 9% increase in existing home sales next year followed by a 13% jump in 2026. He also anticipates new home sales will rise 11% in 2025 and 8% in 2026.

He based the predictions on several factors, including the expectation that mortgage rates are stabilizing and the job market will continue to grow. Homebuyers will also have more inventory to choose from compared to the past five years, he said.

Last year's forecast: When Yun took the stage at this event in 2023, he proposed even more ambitious numbers: Existing home sales would rise 13% and new home sales would jump 19% in 2024. 

But that forecast was predicated in part on the assumption that inflation would ease, pushing mortgage rates into the 6% range by spring. Instead, the opposite happened, and hotter-than-expected inflation drove rates up throughout March and April, peaking at 7.22% in early May.

Home prices remained elevated, and low inventory levels stymied any chance of a bounceback. In September, existing home sales were at an annualized seasonally adjusted rate of 3.84 million, the lowest since October 2010.

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

During an Economics Roundtable in July, Yun and other economists offered a similar assessment: 2024 defied predictions. "We expected a recovery, but instead it has been more of the same," said CoreLogic Chief Economist Selma Hepp at the time, calling 2024 "the year of the head fake." 

Mortgage rates will remain elevated: A rebound in home sales next year will depend on consumer acceptance of higher mortgage rates. While Yun is expecting four rounds of rate cuts by the Federal Reserve in 2025, he believes the new normal for 30-year mortgage rates will be in the 5.5% to 6.5% range.

"There will be less mortgage money available because the government is borrowing so much money," Yun said. "However, if the Trump administration can lay out a credible plan to reduce the budget deficit, then mortgage rates can move downward."

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