WASHINGTON, D.C. – (By Dale King, Realty News Report) – Optimism is returning to real estate circles.
An attitude of confidence prevailed during a wide-ranging, mid-December discussion about the industry’s current status and likely future performance during the sixth annual National Association of Realtors (NAR) Real Estate Forecast webinar involving nearly a dozen industry professionals.
NAR Chief Economist and Senior Vice President of Research Lawrence Yun joined the organization’s Deputy Chief Economist Jessica Lautz and seven real estate economists during the 75-minute session that offered a positive view of the 2025 and 2026 housing markets.
Yun: More Inventory on the Way
“Home buyers will have more success next year,” said Yun. “The worst of the affordability challenges are over as more inventory, stable mortgage rates and continued job and income growth pave the way for more Americans to achieve homeownership.”
NAR forecasts that mortgage rates will stabilize near 6 percent in the coming year, likely establishing a “new normal,” said Yun. He said 6 percent is “not bad. It’s below the long-term average of 7 percent.”
Cryptocurrency for Down Payments
Following Yun’s opening remarks, Lautz offered an assessment of “how consumers are doing.”
“The really big takeaway from Lawrence is that high income and high equity home buyers are the winners,” said Lautz. “In the last two years, more than a quarter of the market has been made up of all-cash buyers.” These are primary home buyers, she noted, not vacation or secondary property purchasers.
The number of “all-cash buyers has hit an all-time high,” she observed. She also pointed out that “one in 10 first-time buyers” complete their purchases with cash – and that includes the “7 percent of shoppers using inheritances” to buy a home. Stocks, bonds and even cryptocurrency are showing up in home purchase transactions, either as a down payment or to cover the full cost of the transaction.
Real estate market demographics are also changing. “The median age of a first-time home buyer is now 38, an all-time high. First-time buyers used to be in their 20s,” Lautz said.
The number of multi-generational households “surged to an all-time high of 17 percent over the past year” as young adults returning to the nest joined elders – all gathering in a single domicile. “They are combining incomes in order to afford home ownership.”
Only 50 percent of first-time home buyers are married, Lautz said. Twenty-four percent of purchasers are single women and “there’s a rise in unmarried couples” who are buying homes to share.
Lautz then turned to her panelists for their input. Danielle Hale, chief economist at Realtor.com, echoed earlier observations that “we expect home sales to go up in 2025 after two slow years.” She opined that the hike next year would be around 1.5 percent – “a slow climb out of this spot,” she said. Hale added that price growth is also in the cards next year.
“Income gains will also help improve affordability,” though she doesn’t see a return to pre-pandemic levels.
Like Yun and most other speakers, Hale said she feels the “locked-in effect” – the situation that hinders people with low home mortgages from selling for fear of losing the smaller-than-now-available monthly payment – “is waning.”
Builders Watching Lumber Tariffs: Rob Dietz of NAHB
Panelist Robert Dietz, chief economist with the National Association of Home Builders, was one of only a few participants to express concerns about the real estate market in the next year or two. “We need more details,” he said, about tariffs being proposed by President-elect Donald Trump. “Less than 10 percent of our building materials are imported. But already, we have a 14 percent tariff on lumber.” He feared added costs could slow home construction.
“I’m also concerned about the possibility of an increase in the budget deficit and its impact on mortgage rates,” Yun said. He commented that “the federal budget deficit could impact mortgage funding availability. The trajectory of mortgage rates will have a major bearing on how the housing market will fare.”
Still, Dietz offered positive comments about the coming year. “I am positive about the extension of 2017 tax cuts and improvements in the regulation environment that will help the housing supply.”
Fratantoni Predicts New Homes Sales Up 10% and Existing Homes to Rise 5%
Also taking a cautious look at 2025 and 2026 was Michael Fratantoni, chief economist and senior vice president of Research and Business Development for the Mortgage Bankers Association. “The U.S. economy may slow” in those years, he said, and he predicted a slight uptick in the unemployment rate, from 4.2 to 4.5 percent.
He did agree with other speakers about the “fading” locked-in effect, and he predicted an increase in home sales – “5 percent growth for existing homes, 10 percent for new homes.”
The meeting also included speakers Brad O’Connor, chief economist, Florida Realtors; Jordan Levine, senior vice president & chief economist, California Association of Realtors; Ryan Price, chief economist, Virginia Realtors and Clare Knapp, housing economist, Austin Board of Realtors. NAR 2024 First Vice President Kevin Brown also spoke.
Dec. 18, 2024 Realty News Report Copyright 2024
Photo credit: Cynthia Lescalleet, CALpix, Realty News Report, Copyright 2024
THE RALPH BIVINS PROJECT PODCAST
LISTEN: THE RALPH BIVINS PROJECT with Danny Rice of Colliers
LISTEN: THE RALPH BIVINS PROJECT with Trey Odom of Avera
LISTEN: THE RALPH BIVINS PROJECT with Kris Larson of Downtown Houston +
LISTEN: THE RALPH BIVINS PROJECT with Jim Carman of Howard Hughes Holdings
LISTEN: THE RALPH BIVINS PROJECT with Jeff Havsy of Moody’s Analytics
LISTEN: THE RALPH BIVINS PROJECT with Sam Scott of CommGate
LISTEN: THE RALPH BIVINS PROJECT with John S. Moody, Jr. of Moody Law Group
LISTEN: THE RALPH BIVINS PROJECT with Scott Martin of Granite Properties
LISTEN: THE RALPH BIVINS PROJECT with Robert Clay of Clay Development
LISTEN: THE RALPH BIVINS PROJECT with Alma Zavala of CommGate
LISTEN: The RALPH BIVINS PROJECT with Adam Lair of Partners Capital
LISTEN: The RALPH BIVINS PROJECT with Jake Donaldson of Method Architecture
LISTEN: The RALPH BIVINS PROJECT podcast with Bill Baldwin of BLVD Realty
LISTEN: The RALPH BIVINS PROJECT podcast with Johnny Cruz of RAMSA
LISTEN: The RALPH BIVINS PROJECT podcast with John Breeding of Uptown Houston
Listen: THE RALPH BIVINS PROJECT podcast with Dean Strombom of Gensler
LISTEN: THE RALPH BIVINS PROJECT podcast with Lou Cushman of Cushman & Wakefield
File: Housing Economists Predict Improvement NAR, NAHB, Lawrence Yun, Jessica Lautz,Housing Economists Predict Improvement Rob Dietz, Kevin Brown, MBA