The National Association of REALTORS® (NAR) recently released its housing forecast, revealing some interesting trends in the real estate market. Despite the challenges posed by low housing inventories and surging prices, the market is showing signs of resilience and recovery.
According to the latest data, pending home sales rose by 0.3% in June, marking the first increase in four months. This indicates that the housing market is on the mend, and the previous slowdown may be coming to an end. However, the recovery is not without its struggles. Housing inventories remain historically low, down by 13.6% compared to last year, leaving home buyers with limited choices and facing multiple offer situations.
“The recovery has not taken place, but the housing recession is over,” says Lawrence Yun, NAR’s chief economist. “The presence of multiple offers implies that housing demand is not being satisfied due to a lack of supply. Homebuilders are ramping up production and hiring workers.”
Yun highlights the crucial issue of supply and demand imbalance, which is driving up home prices. With the scarcity of available homes, buyers are competing for the limited inventory, causing prices to soar. However, there may be some relief on the horizon as mortgage rate increases are likely to stabilize. Yun suggests that as consumer price inflation calms and the job market continues to grow, any decline in mortgage rates could lead to a surge in buyers later this year and into 2024.
The NAR’s forecast for the housing market indicates that existing-home sales are expected to fall by 12.9% in 2023 compared to 2022 but rebound by 15.5% in 2024. National median existing-home prices are predicted to remain relatively steady, showing just a 0.4% decrease compared to the previous year for 2023, before rebounding by 2.6% in 2024. New-home sales, on the other hand, are projected to rise, providing more inventory options for buyers. The forecast shows a decline in housing starts in 2023 but expects a rise of 5.4% in 2024 to address supply deficits.
Overall, the real estate market is showing signs of progress despite the challenges it faces. To ensure sustained growth and greater accessibility for prospective buyers, increased homebuilding is crucial. As more supply comes to the market, price growth can be better controlled, allowing more Americans to achieve their dream of homeownership.
What does this signal? Are we out of the woods? Or is a whole new mess of hornets just around the corner?
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