The housing market has been through its fair share of challenges in recent years, from the financial crisis to the impact of the COVID-19 pandemic. However, there is a glimmer of hope on the horizon. According to the National Association of Realtors (NAR)'s chief economist, Lawrence Yun, the housing recession is finally over. In this article, we will explore the insights provided by the NAR's economist and discuss the implications for homeowners, buyers, and the overall economy, based on the information from NAR's website.
Lawrence Yun emphasizes that although the recovery has not yet fully taken place, the housing recession is officially over. One key indicator of this recovery is the increase in contract signings, indicating a rising momentum in the housing market. In June, NAR's Pending Home Sales Index, which measures contract signings as a forward-looking indicator, saw a 0.3% increase, marking the first rise in four months.
Several factors contribute to the positive outlook for the housing market:
Housing demand remains robust, with buyers facing multiple offer situations due to a lack of supply. Lawrence Yun explains that the presence of multiple offers indicates unsatisfied demand in the market. To address this, homebuilders are increasing production and hiring workers, which further supports the recovery of the housing market.
Historically low mortgage rates have played a vital role in stimulating the housing market. The Federal Reserve's commitment to keeping interest rates low has increased affordability, fueling buyer demand. Although home prices and mortgage rates have been rising, Yun suggests that the recent stabilization in mortgage rates could lead to a rush of buyers in the later part of this year and beyond.
Despite the challenges brought by the COVID-19 pandemic, the housing market has displayed remarkable resilience. Yun notes that home sales have been strong, with many existing homes sold within a month or less. This resilience demonstrates the underlying strength of the market.
The NAR also provides an outlook for the housing market based on their analysis:
NAR predicts a decline of 12.9% in existing-home sales for 2023 compared to 2022. However, they forecast a rebound of 15.5% in 2024.
National median existing-home prices are expected to remain steady, with a slight decrease of 0.4% compared to 2022. In 2024, NAR predicts a rebound with an increase of 2.6% in home prices.
Newly constructed homes are expected to drive growth in home sales, as buyers search for more inventory options. NAR forecasts a 12.3% increase in sales in 2023 and a further 13.9% increase in 2024.
Addressing the supply deficit, NAR calls for an increase in housing construction. They predict a 5.2% decline in housing starts in 2023 compared to 2022, followed by a 5.4% increase in 2024.
Based on the insights provided by the NAR economist, it is clear that the housing recession is over. Factors such as strong buyer demand, low mortgage rates, and a resilient market indicate a positive trajectory for the housing industry. However, challenges such as limited supply and rising prices remain. It is essential for homeowners, buyers, and industry professionals to stay informed about market developments and work with trusted advisors to navigate the changing landscape of real estate.
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