NAR Midyear forecast
Last week at NAR’s annual REALTORS Legislative Meetings and Trade Expo (NAR Midyear) in Washington, key economic leaders took to the stage to forecast home sales for the coming year.
What to expect
NAR’s Chief Economist, Lawrence Yun, presented a midyear economic forecast. When it comes to existing homes, according to Yun’s report, the first quarter sales hit 5.62 million, the highest since 2006 and a 3.5 percent increase from last year. He said that these figures “exceeded expectations” and attributed the sales increase to “record highs” in the stock market, “16 million new jobs created since 2010… and rising consumer confidence.”
However, Yun also noted that the number of new homeowners remains somewhat suppressed.
That suppression is largely due to lack of listings in the low- and middle-market range. Pricing growth in many metropolitan areas has caused overall existing-home prices to rise by 5 percent, making many existing homes unaffordable to first time buyers and young families. “Prices are still rising too fast in many areas and are outpacing incomes,” Yun explained.
Low ownership rate
Unfortunately, new home construction may not make up for the difference. Yun explained that the “building industry’s ability to produce more single-family homes” was being thwarted by “limited lots, labor shortages, tight construction lending and higher lumber costs.” Yun predicts that 1.5 million new homes will need building, an increase in housing construction of 8.4 percent.
Yun believes that sales will increase when “there’s a meaningful bump in new and existing inventory.”
Yun was also joined onstage by Jonathan Spader of the Joint Center for Housing Studies at Harvard University. Spader added to Yun’s analysis of the low homeownership rate, adding that older adults are foreclosing, while younger homebuyers are delaying their purchase in hopes of an economic upturn. Nonetheless, he anticipates reaching over 60 percent homeownership by 2025, with increasing diverse family structures, races, and ethnicities represented amongst homeowners.