NAR is projecting a 13% increase in existing-home sales in 2024 (from 2023) to 4.62 million and a 15.8% increase in 2025 (from 2024) to 5.35 million and said interest rates will be cut four times.
WASHINGTON – Pending home sales in December elevated 8.3%, according to the National Association of Realtors®, with the South, Midwest and West posting monthly transaction gains and the north recording a loss. The South, Midwest and West also registered year-over-year increases while the Northeast had a decline in transactions compared to last year.
NAR’s Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – increased to 77.3 in December. Year over year, pending transactions were up 1.3%. An index of 100 is equal to the level of contract activity in 2001.
“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” said Lawrence Yun, NAR chief economist. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
Regional PHSI breakdown:
South – Jumped 11.9% to 93.0 in December, rising 1.5% from the prior year
Midwest – Increased 5.6% to 80.5 in December, up 4.3% from one year ago
West – Surged 14.0% in December to 61.0, up 1.5% from December 2022
Northeast – Dropped 3.0% from last month to 62.3, a decline of 3.9% from December 2022
NAR Quarterly U.S. Economic Forecast
NAR also released its economic outlook as of January 2024, projecting a 13% increase in existing-home sales in 2024 (from 2023) to 4.62 million and a 15.8% increase in 2025 (from 2024) to 5.35 million. The annual median home price is expected to rise 1.4% to $395,100 in 2024, and then increase 2.6% to $405,200 in 2025.
“Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity,” added Yun.
The Federal Reserve will likely cut interest rates four times. The 30-year fixed mortgage rate will bounce along the 6% to 7% range for most of the year.
NAR forecasts that due to sizable growth in apartment construction over the past three years, rent growth will calm, which will help bring consumer price inflation to less than 3% in 2024.
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