Last year was a difficult year for home sales; this year will likely not show much improvement, according to National Association of Realtors chief economist Lawrence Yun. However, looking ahead, Yun predicts the worst of the housing inventory shortage coming to an end, mortgage rates stabilizing, and job additions continuing.
"Maybe the worst is coming to an end. Directionally, I think there's going to be roughly a 10% boost of existing-home sales in 2025 and 2026," Yun told Realtors at the Residential Economic Issues and Trends Forum during the Nov. 8–10 National Association of Realtors NXT, The Realtor Experience annual conference and expo in Boston, MA.
Although 2024 was a difficult year for real estate on many fronts, Yun noted wealth accumulation continues to increase among homeowners. Household equity in real estate is at a record high. He told Realtors, "Over the years, you see your past clients doing well, because they're homeowners. There's an intangible value that [Realtors] provide."
This means there has been a huge increase in wealth for Realtors' past clients to the tune of $35 trillion. Yun highlighted the glaring difference in estimated median net worth between homeowners ($415,000) and renters ($10,000) in 2024.
"Homeowners' wealth steadily rises while renters' wealth does not," said Yun. "If you don't enter the housing market, you are in the renter class where wealth is not being accumulated. If you want to participate in the housing market, the sooner you get in, the sooner you accumulate wealth."
Yun pointed out that US job gains since the beginning of the COVID-19 pandemic have led to record-high payroll employment as of September 2024. "When more people work, they have the capacity or they're in a better position to buy a home. Home sales depend mainly on jobs and mortgage rates."
Yun expects there will be four different rounds of rate cuts in 2025, but doesn't foresee a return to 4% mortgage interest rates. "It's more likely that we'll go back to 6%. That will be the new normal, bouncing around 5.5%-6.5%."
NAR's chief economist advises the Federal Reserve to make these cuts sooner than later. "My advice to Jerome Powell: do it in January, rather than December," he said.
Addressing the budget deficit and President-elect Trump's promise to cut taxes, Yun said, with already a massive budget deficit, and will be less mortgage money available because the government is borrowing so much money. If Trump administration can lay out a credible plan to reduce the budget deficit, then mortgage rates can move downward. Another way to address the budget deficit is to bring down the price of housing.
"We have to have more supply," said Yun. "Per our advocacy efforts, we're trying everything we can to boost supply."
Yun projects new home sales to be 11% higher in 2025 and 8% higher in 2026. Yun forecasts the median home price to be 2% higher in both 2025 and 2026.
More than 10,000 real estate agents, brokers, companies and others from across the US and nearly 40 countries, including 100 delegates from the Philippines, participated in the annual conference. Representing the Silicon Valley Association of Realtors at the event were CEO Paul Cardus, President-elect Tammie Peters, Past President Jim Hamilton, NAR Director Denise Welsh, and NAR committee members Leannah Hunt and Suzanne Yost, and Global Business Council past chair, Atsuko Yube. SILVAR is NAR's Global Ambassador Association to the Philippines and the Philippines' Chamber of Real Estate & Builders Associations is its partner association.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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