During NAR’s 2023 REALTORS® Legislative Meetings, Lawrence Yun, the Chief Economist of the National Association of Realtors®, stated that he believes the recent rate hike by the Federal Reserve was unnecessary and expects them to halt further increases in interest rates. Yun also discussed the impact of recent economic developments on the housing market, while Robert Dietz, the Chief Economist for the National Association of Home Builders, talked about the challenges that builders continue to face. During the panel discussion, Realtors® Bobbi Howe and Maura Neill examined their respective areas’ current market conditions and challenges.
Yun explained that the Fed’s aggressive rate hikes have negatively affected regional banks and the housing market. While inflation has started to calm down, rents for apartments and single-family homes are still high. Yun predicted that inflation would come down closer to 3% by the end of the year, and rent growth would decrease due to the high number of apartments under construction.
Yun acknowledged that new home sales are back to pre-pandemic levels, but existing-home sales remain historically low due to a lack of inventory. Yun emphasized the need to increase housing inventory, which he believes is the long-term solution to the housing shortage. Yun also stated that while housing prices have increased dramatically due to the shortage, recent price declines are temporary.
Dietz agreed with Yun about the lack of housing inventory and inflation. He suggested that more affordable housing should be built to address these issues. Dietz also discussed the supply-side factors that pose a challenge for builders, including high building material costs and regulatory costs.
Dietz predicted that interest rates will not ease until 2024 and that the back half of this decade looks promising. Finally, during the panel discussion, Howe and Neill advised using national-level data to inform local decisions and coming from a place of abundance rather than scarcity when dealing with high-interest rates.