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A year ago, the chief economist for the National Association of REALTORS® predicted a rebound in 2024. It never materialized, but he now thinks that after more than two years of sluggish sales, the housing market is (finally) primed for a recovery.
Speaking from the stage at the association's annual NAR NXT conference on Nov. 8, Lawrence Yun forecast a 9% increase in existing home sales next year followed by a 13% jump in 2026. He also anticipates new home sales will rise 11% in 2025 and 8% in 2026.
He based the predictions on several factors, including the expectation that mortgage rates are stabilizing and the job market will continue to grow. Homebuyers will also have more inventory to choose from compared to the past five years, he said.
"2024 has been a very difficult year on many fronts. We did not get the home sales recovery this year after an awful 2023," Yun acknowledged from the stage.
A rebound in home sales next year will depend on consumer acceptance of higher mortgage rates. While Yun is expecting four rounds of rate cuts by the Federal Reserve in 2025, he believes the new normal for 30-year mortgage rates will be in the 5.5% to 6.5% range.
"There will be less mortgage money available because the government is borrowing so much money," Yun said. "However, if the Trump administration can lay out a credible plan to reduce the budget deficit, then mortgage rates can move downward."