Falling Long-Term Interest Rates, Rising Existing-Home Sales Predicted in 2024

(May 11, 2024) At the 2024 REALTORS® Legislative Meetings, the stage was set for an insightful discourse on the future landscape of real estate, courtesy of the esteemed National Association of Realtors® Chief Economist Lawrence Yun. It all took place at the “Residential Economic Issues & Trends Forum,” where Yun seized the opportunity to unveil his meticulous forecasts, offering a glimpse into what lies ahead for the real estate sector in 2024 and beyond.

Delivered with precision and authority, his remarks illuminated key insights and projections, shedding light on the intricate dynamics shaping the housing market’s trajectory. That said, we know that no one likes to read, so we’ve provided the highlights from that Forum below. Enjoy!

  • Interest Rate Forecast:
    • Long-term interest rates are predicted to decrease.
  • 2024 Existing-Home Sales:
    • Expected to reach 4.46 million, marking a 9% increase from 2023.
  • 2025 Existing-Home Sales:
    • Projected to rise to 5.05 million, a 13.2% increase from 2024.
  • Rent and CPI:
    • Yun anticipates further stabilization in rents, which could influence the Consumer Price Index (CPI) and potentially lead to Federal Reserve interest rate cuts.
  • Job Market Impact:
    • April’s employment data indicates a significant increase in jobs compared to pre-Covid levels, contributing to higher home prices.
  • Economic Strength and Housing Market:
    • Yun emphasizes the correlation between a robust local economy and a thriving housing market, stating that more jobs result in increased home sales and higher housing demand.
  • Homeownership vs. Renting:
    • Highlights the substantial wealth gap between homeowners and renters, underscoring the importance of homeownership in wealth accumulation.
  • Home Sales Comparison to 1995:

Despite significant population and job growth since 1995, home sales struggled in 2023 and early 2024 due to high mortgage rates and inventory shortages.

  • Housing Inventory Challenges:
    • Insufficient housing supply fails to meet demand, prompting advocacy for policy interventions.
  • Impact of Mortgage Rates:
    • Discusses the influence of mortgage rates on home affordability, noting the Federal Reserve’s delay in rate cuts and its implications.
  • Homeowner Satisfaction and Realtor Services:
    • NAR data indicates high satisfaction among buyers who utilized real estate agents, reflecting positively on the industry.
  • Government Spending and Inflation:
    • Raises concerns about the government deficit and its potential impact on rising rates, suggesting a shift towards inflation hedging through real estate investments.