Despite growing concerns about a possible economic slowdown, National Association of Realtors chief economist Dr. Lawrence Yun's message to Realtors attending NAR's March 21 Real Estate Forecast Summit was upbeat.
"We are beginning to see a little light at the end of the tunnel… We are beginning to see a little more inventory coming onto the market," he announced.
Yun indicated 2023 and 2024 were the two most difficult years for real estate. Although homebuilding activity increased since Covid, inventory of existing homes was limited due to the lock-in effect. Now housing inventory appears ready to turn the corner.
Among the 88 million homeowners across the country, 35.2 million own their home free and clear. Nine million homeowners have mortgage rates above 6%, while 11.6% are locked in with mortgage rates of 3% or less unless they have a life-changing event that will force them to move.
Yun said major life changing events accumulate over time. Whether it be a birth, death, marriage, divorce, a new job or retirement, with the passage of time he expects more inventory as the lock-in effect weakens. "If interest rates decline, we'll see what the tail winds provide."
Yun indicated that there's positive job movement nationwide. Although DOGE laid off 10,000 federal workers in February, state and local governments increased hiring by 20,000, mostly in the field of education.
One thing that hasn't declined is housing equity. Recent data shows the median net worth of homeowners in 2025 is an estimated $430,000 versus $10,000 for renters.
"Something Realtors should clearly emphasize with any potential clients is that real estate values continue to hit record highs," said Yun.
Price gains since pre-Covid (2020 Q1 to 2024 Q4) are at all-time highs throughout the country, with some states experiencing higher gains than others. Homes in western states like California, Idaho and Wyoming have price gains of 44.7%, 64.6% and 69.2%, respectively. In the east, prices are up a record 73.1% in Maine and 68.3% in New Hampshire and Vermont. Prices in the southeast are up 67% in North Carolina and 70.9% in Florida.
"Anytime you have 40% appreciation in a five-year time span, this is a sizeable gain for homeowners. These charts show that in order to build wealth in America, you have to be a homeowner," said Yun.
Last week the Federal Reserve decided to hold interest rates steady but said it may consider at least two more rate cuts this year. Yun reminded Realtors that Fed rate cuts last fall did not bring mortgage rates down. "Keep in mind the Fed does not control mortgage rates. Mortgage rates are more tied to the 10-year treasury. Mortgage rates can go down with the Fed rate cut if inflation is under control."
Home sales have always depended mainly on jobs and mortgage rates. Now a new factor enters and that's inventory availability, said Yun. "I would not be surprised if existing home sales this year rises… For home sales the worst is over. The recession probability is still slim. Job conditions, lower mortgage rates, all the factors driving home sales are moving positively, so look forward for business opportunities this year."
Yun predicts an increase of 6% in existing home sales nationwide this year and 11% next year, and median home prices modestly rising 3% in 2025 and 4% in 2026. He expects the mortgage interest rate to level at 6.4% this year and 6.1% next year, and job gains to reach 1.6 million in 2025 and 2.4 million in 2026.
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