Home sales optimism fades with NAR economist’s new forecast 

National Association of Realtors Chief Economist Lawrence Yun is tempering his 2025 existing home sales forecast as elevated mortgage rates continue to keep pent-up demand on the sidelines.

Spring update: During NAR's quarterly economic update on March 21, Yun said he expects existing home sales to rise 6% in 2025 — a drop from his forecast of 9% back in November.

Yun also predicted that new home sales will rise 10% and home prices will climb 3%. The 30-year fixed-rate mortgage, which Freddie Mac pegged at 6.67% last week, will drop to 6.4% by the end of the year, Yun said.

Explaining the downgrade: Some factors, such as rising inventory and strong job creation during a slow couple of years for home sales, are in place for a rebound. But mortgage rates need to be lower to unleash demand.

Last week, the Federal Reserve left interest rates unchanged but indicated cuts could be on the way later this year. "I believe that the Federal Reserve will do another two or three rounds of rate cuts by early 2026," Yun said. "They will be doing this rate cut at a time when inflation, in my view, will be calmer."

Given the widespread concern about what impact tariffs will have on inflation this spring, it may take some time to reach that calmer state. While deregulation and lower energy prices could ease rising costs, job growth might be the tipping factor. The U.S. added millions of jobs in 2023 and 2024 as home sales were at 30-year lows.

"This implies that maybe we have many people in the pipeline to buy a home, provided the conditions are right," Yun said.