Real estate pros know homeownership is the dream of most Americans, and a recent survey by the Federal Reserve Bank of New York confirms it: A large majority of renters say they would prefer to own a home—more than 70%, compared with less than 15% who say they prefer to rent.
At the REALTORS® Legislative Meetings in Washington, D.C., this week, NAR Chief Economist Lawrence Yun took a moment to laud members of the National Association of REALTORS® for their work: “Thank you, to everyone here, for trying to shift this aspiration into future reality.” Over the past two years, it hasn’t been easy.
Residential sales in 2023 and 2024 were the lowest they’ve been in 30 years, Yun said at Tuesday’s Residential Economic Issues & Trends Forum. A range of factors are working against would-be homeowners today—from lack of affordable inventory to recent indications the Fed will delay further rate cuts.
Still, with continued pent-up demand, more inventory coming online, and rate cuts expected in the fall, Yun expects an upturn in the second half of 2025. He’s forecasting a 6% increase in existing home sales in 2025 and an 11% increase in 2026. New-home sales, which have been a bright spot thanks to generous builder incentives, are expected to be up by 10% in 2025 and by 5% in 2026. And Yun predicts the median price nationally will continue to rise—by 3% in 2025 and by 4% in 2026.
What About Those Mortgage Rates?
When it comes to the housing market, “your past clients are all happy,” Yun said, citing sustained gains in home values. But for prospective buyers, it’s been another story as mortgage rate hikes erode their purchasing power—and uncertainty about the direction of rates keeps them on the sidelines.
“Mortgage rates are the magic bullet, and we’re waiting and waiting until those come down,” he said.
Inflation was at 2.3% in April, Yun said, slightly higher than the Federal Reserve’s 2.0% implicit target. “The Fed will cut interest rates once inflation is fully under control. We’re not there yet, but we’re very close.”
Homeownership as a Wealth Builder
In every state, as well as Puerto Rico, Yun said, median home prices have risen significantly over the past five years, increasing the gap between the median net worth of homeowners and that of renters. He estimates a 45% gain in the median net worth of owners starting in 2019. Renters’ median net worth has increased by only 36% since 2019 and stagnated over the past three years, Yun says. And a staggering gap remains between the two: The median net worth of owners is estimated at 43 times that of renters.
What will it take to get more people on the path toward wealth building?
Danielle Hale, chief economist for realtor.com®, also spoke at the forum and joined Yun in thanking NAR members for their efforts to expand homeownership.
With the homeownership rate for younger Americans slipping, Hale told forum attendees, Realtor.com has analyzed the inventory gap to address potential solutions. She said the nation needs more homes priced at $250,000 and below. Realtor.com is raising awareness through its “Let America Build” campaign. Hale invited real estate professionals to download and share co-brandable social media assets to spread the word.
Reasons for Optimism
Despite economic risks, including an increase in the national debt since 2018, there are many reasons to be optimistic about the future direction of home sales, Yun said. The U.S. has added 7 million jobs since the COVID-19 lockdown, and wage growth (3.8%) is currently outpacing the consumer price index (2.3%). Serious mortgage delinquencies remain historically low—and recent increases in mortgage applications indicate that interest is strong, even if many buyers are in waiting mode, he said. “There’s a light at the end of the tunnel.”
View Yun’s slide presentation: June 2025 Real Estate and Economic Outlook.
