Inventory and Home Sales to Rise in 2025, Says NAR Chief Economist Dr. Yun

The National Association of Realtors® Chief Economist Dr. Lawrence Yun discussed his real estate forecast for the year during PAR’s webinar “Economic Issues and Home Sale Trends,” which included predictions on inventory, home sales, mortgage rates and more for this year. 

Net Worth for Owners Increases 

To start, Dr. Yun noted the overall increase of net worth for homeowners and the gap between homeowner wealth and renter wealth. In 2022, the median net worth of homeowners was $396,200, compared to that of renters at only $10,400. Dr. Yun estimated that 2024 data will show $415,000 for homeowners and $10,000 for renters. 

“This shows the drastic difference between homeowners and renters in terms of wealth acquired over the years,” he said, encouraging Realtors® to share this data with potential homebuyers and first-time buyers. 

Home Price Appreciation Up 

“Pennsylvania is showing a 49% price appreciation from pre-COVID to the most recently available data, which is the third quarter of 2024,” Dr. Yun stated. “This is a dramatic growth in prices, and in such a short span of time.” 

He noted that remote/hybrid work may be impacting home price gains, as more people who work remotely are choosing to buy property without the limitations of work logistics and commute considerations. However, with more employees returning to in-person work, this may change. 

More Contract Signings 

Although year-over-year pending contract signings remained low throughout most of last year, Dr. Yun shared data showing they increased from September onward. Most recently, November’s pending contract signings were up about 7% from November 2023. 

Inventory Growing 

“We are beginning to see more inventory showing up on the market, and this may be the key reason as to why we are seeing increased pending contract sales activity,” Dr. Yun said. 

National inventory has fluctuated, showing an overall decline in the past decade. However, data suggests that it’s on the up, and he predicts that will continue in 2025. 

Expecting Fed Rate Cuts and Steady Mortgage Rates 

“Unfortunately, we are not going to go back to 4% or 5% mortgage rates,” said Dr. Yun, though he did note that he expects the Federal Reserve to cut interest rates two to four times this year and for inflation to decrease. 

“The mortgage rate, I think, is a little high at 7%, but it’s going to settle down at 6% or 6.5%,” he said, telling people to expect the new normal to be around this range. He attributed the only slight decline to the large amount of national debt the United States currently has. 

Better Conditions Ahead 

In general, Dr. Yun indicated that 2025 may be a better year for real estate, with more inventory, more listings and more sales. 

“Overall, I see home sales rising 9% this year and another 13% next year,” he predicted. “Builders will continue to do well. But the price growth, I think, will be more muted. It will be positive, but more lightly positive – 0% to 5%. My computer model is saying 2%, but we have to wait and see.” 

“Just like trying to forecast how many inches of snow we’ll get, we have to wait and see. But the conditions for snow develop, and conditions for more home sales are developing. More jobs, mortgage rates stabilizing, if not going down somewhat to 6% – all of these are positive factors.” 

“So this is the reason why I think the worst is over for business opportunity for Realtors®,” Dr. Yun concluded. “You are looking at better conditions in years ahead. This year and next year, and if I were to do another 10 years, probably eight of the next 10 years would be improving years.”

To hear more about Yun’s 2025 housing market forecast, view the webinar recording.