Insights from the 2023 NAR® Residential Real Estate Forecast Summit
Insights from the NAR Residential Real Estate Forecast SummitThe National Association of REALTORS® recently held its annual Residential Real Estate Forecast Summit, an event aimed at providing valuable insights into the current state and future projections of the residential housing market. Introduced by NAR's First Vice President, Kevin Sears, and presented by NAR Chief Economist Lawrence Yun and NAR Deputy Chief Economist Jessica Lautz, the summit shed light on important economic indicators, inflation trends, and housing market shifts with implications for both REALTORS® and your clients. Let's dive into the key takeaways from this event.
Economic Overview: Home Prices, Inflation, Interest & Mortgage Rates
The summit first dove into the economic landscape, examining the factors currently influencing the housing market. Dr. Yun focused on the potential effects of the downgrade of U.S. debt on borrowing costs and mortgage rates. He also highlighted the recent aggressive rate hikes by the Federal Reserve, driven by inflation. However, he noted that recent inflation data suggests a more stable trend, which could prompt the Fed to pause rate hikes or even consider rate cuts in the future.
Yun reports that the Federal Reserve is cautious about raising interest rates, as it could negatively impact community banks that showed distress in response to previous rate hikes. Moreover, mortgage rates often follow government borrowing rates, and the spread between them could normalize, potentially resulting in lower mortgage rates.
Yun discussed home prices, revealing a nationwide decline from the previous year and highlighting varying price trends across different states, pointing out markets experiencing positive trends.
Job Market Trends & Generational Behavior
The discussion then jumped to the job market, which is intrinsically linked to the real estate sector. NAR® experts presented data on job creation and labor shortages, explaining that while job openings remain high, their growth rate is slowing down. Yun highlighted the trend of individuals leaving the labor force, contributing to the ongoing shortage of labor.
Dr. Jessica Lautz emphasized the importance of generational trends in shaping buyer behaviors. Millennials emerged as a significant demographic, as they should be the largest generation of home buyers. However, their path to homeownership is marked by challenges like bidding wars with all-cash buyers and high prices. Gen-Z buyers are also entering the market, mostly with parental support, signifying a changing landscape.
To Sum it Up
NAR®'s Residential Real Estate Forecast Summit was a comprehensive overview of current economic conditions and housing market trends. From inflation and interest rates to home sales, price trends, and labor dynamics, this forecast will equip you with the knowledge necessary to navigate the evolving residential real estate landscape.
You can access the full recording of the summit and the slides presented by Lawrence Yun and Jessica Lautz during the presentation by clicking here.