Anaheim, California (November 15, 2023) – Rising mortgage rates, soaring home prices, and limited housing inventory are making the dream of homeownership difficult for Americans, according to NAR Chief Economist Lawrence Yun. It is said that it has become.
Mr. Yun analyzed the current state of the U.S. residential real estate market and shared his outlook for 2024 yesterday at the 2023 NAR NXT, The Realtor® Experience's Housing Economic Issues and Trends Forum in Anaheim, California.
He explained that high mortgage rates and low inventory will dominate 2023, saying, “High mortgage rates for the past 20 years are deterring homebuyers. There is also a shortage of housing inventory for sale. “This means that there are fewer sales opportunities in the market.”
Yun said home sales are likely to drop 18% this year, further exceeding last year's 17% decline.
Due to the impact of abnormally high interest rates, 30-year fixed mortgage interest rates will continue to rise in 2023, reaching a maximum of 8%.
“These high interest rates have a significant impact on the overall economic performance of the United States,” Yun said.
“Statistically, it's much better than the historical average, but if you look at this part of the economy, there are some worrying signs in the economy,” Yun said, referring to the latest GDP figures that grew by 4.9%. he warned. The first is that corporate spending is essentially flat. Second, the inventory of goods is increasing, which means that products are being produced but not being sold.
“We can’t keep adding shelves,” Yun said. “Just like with housing, businesses have to borrow money, but borrowing is more expensive, so business spending is down.”
Yun also touched on employment, saying, “The employment statistics are in a positive direction, but they are showing less strength with each passing month.Based on the trend line, employment is in the negative.'' “The future GDP statistics are likely to be alarming.”
He also told the audience that as of this morning, the Consumer Price Index (CPI) was fairly calm, indicating that the US Federal Reserve (Fed) needs to adjust its monetary tightening stance.
“The 10-year Treasury yield is 4.4%, which historically means mortgage rates could be 6.4%, but interest rates are much higher,” Yun said. . “The bond market is forcing the Fed to change direction.”
Yun also mentioned high housing prices.
“Low inventory is supporting high prices, but making it extremely difficult for first-time buyers to enter the housing market.”
Yun said 30-year mortgage rates and federal funds rates have likely reached new highs.
“I think interest rates have already peaked,” Yun said. “The question is, when will interest rates come down?”
Yun expects interest rates to fall to 6% to 7% by the spring buying season, and expects more sellers to enter the market.
“Builders have bounced back, and year-to-date new home sales are up 5%,” Yun said. “Builders just have to build inventory. In a housing shortage environment, builders are really benefiting.”
He explained that NAR's advocacy efforts are contributing to the creation of inventory, but it takes time.
“The pent-up sellers can't wait any longer. People will start saying, 'Life goes on,'” Yun said. “Listings are increasing steadily and new home sales will continue to be strong. Existing home sales will increase by 13.5% next year.”
Yun also said that although overseas buyers have decreased, there will be more buying once they return to the market.
He reiterated the value of homeownership, saying, “Consumers are satisfied with real estate services. The market has so many business models to choose from, from do-it-yourselfers to iBuyers to discount brokers to full-service and rebates. , is fiercely competitive.Homebuyers have benefited greatly from such a wide range of choices in real estate services.Furthermore, homeowners have accumulated significant wealth over time. ”
About the National Association of Realtors®
The National Association of Realtors® is the nation's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered association membership mark that identifies real estate professionals who are members of the National Association of Realtors® and adhere to its strict code of ethics.
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