THE REAL ESTATE MARKET IS ALWAYS EVOLVING

Over The Last Year, The Changes Seemed To Be As Significant As Ever:

Mortgage Rates Fluctuated, Home Prices Neared All-Time Highs, And Industry Policies Were Rewritten.

Against That Backdrop, Millions Of Buyers And Sellers Looked To Make A Move.

NAR Chief Economist Lawrence Yun Forecasts 9% Increase in Home Sales for 2025 and 13% for 2026, with Mortgage Rates Stabilizing Near 6%.

At the NAR NXT conference in Boston last week, Chief Economist Lawrence Yun shared his 2025 predictions for the housing market. He discussed anticipated trends in home sales, home prices and mortgage rates—all factors that could shape real estate in the coming year.

Home Sales Projections

Yun’s forecast suggests that, after two challenging years, the housing market is poised for recovery. The combination of rising employment rates and an improving economy may stimulate increased home sales—not to mention the assurance that comes after an election.

“We’ve seen after presidential elections—and it doesn’t matter who wins—that there’s usually a slight boost in home sales,” Yun said. “It removes some uncertainty. Now you know it can be the policy of a President, and you can make predictions about what will happen and make a decision based on that.” 

2025 Home Sales Projection:

• Existing home sales: +9% year-over-year
• New home sales: +11%

2026 Home Sales Projection:

• Existing home sales: +13% year-over-year
• New home sales: +8%

Yun also pointed out that the worst of the housing inventory shortage appears to be coming to an end. With inventory levels rising, both for new and existing homes, it could help to meet the pent-up demand driven by a growing U.S. population.

Household Equity

In his address, Yun emphasized the importance of homeownership in building wealth. In fact, household equity in real estate is at a record high, contributing to a stark difference in wealth accumulation between homeowners and renters. 

Homeowners’ median net worth in 2024 stands at $415,000, compared to just $10,000 for renters. He noted that younger Americans continue to struggle to enter the housing market—the market share of first-time homebuyers rate dropped from 32% to a record low of 24% last year. Yet, homeownership remains a powerful tool for building long-term financial security and wealth.

“Homeowners’ wealth steadily rises while renters’ wealth does not. If you don’t enter the housing market, you are in the renter class where wealth is not being accumulated. If you want to participate in the housing market, the sooner you get in, the sooner you accumulate wealth.”

Lawrence Yun

Chief Economist, National Association of Realtors

Home Price Projections

While the past few years have brought rapid home price increases, Yun anticipates a slower rate of PRICE growth. While homeowners have seen significant equity gains, he predicts a shift toward more modest price increases, aligning more closely with wage growth to avoid further widening the wealth gap between homeowners and renters.

Median Home Price Projections:

• 2025: $410,700 (+2% over 2024)
• 2026: $420,000 (+2% over 2025)

“The strong price increases cannot be sustainable for another five years, … with only a few getting to experience the tremendous housing wealth. If we bring more supply to the housing market, home price increases will not be as outrageous … and will be more in line with wages.”

Lawrence Yun

Chief Economist, National Association of Realtors

Mortgage Rate Forecast

Mortgage rates remain a crucial factor for market activity. This year, 30-year fixed-rate mortgages have ranged from 6.08% to 7.44%. Yun forecasts stabilization at the lower end of this range over the next two years, even though recent Federal Reserve rate cuts might not lead to a rapid decline in mortgage rates due to budget deficits limiting available mortgage funds.

Factors that could lower rates include reduced budget deficits, relaxed housing regulations for builders, or an increase in the labor force. However, Yun cautioned that a dramatic drop to pre-2020 mortgage rates remains unlikely, as government borrowing pressures continue to affect rates.

“Mortgage rates in 2016 were around  4%- those were the good old days. Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%. That will be the new normal, bouncing around 5.5%-6.5%.”

Lawrence Yun

Chief Economist, National Association of Realtors

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