Amid the challenges posed by the current real estate market conditions, the National Association of Realtors (NAR) has unveiled a report outlining optimistic projections for existing-home sales.
A new NAR report is forecasting a 13 percent increase in existing-home sales in 2024, to 4.62 million, and a 15.8 percent increase in 2025, to 5.35 million. The association is basing its predictions on the fact that pending home sales increased by 8.3 percent nationwide in December.
Month-over-month contract signings also flourished across the country, with the exception of the Northeast, where sales remain sluggish. In fact, that region saw a decline in sales compared to the same period in 2022.
“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’s chief economist. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
The Pending Home Sales Index (PHSI), an indicator of home sales based on contract signings, rose to 77.3 in December. Year over year, pending transactions were up 1.3 percent. An index of 100 is equal to the level of contract activity in 2001.
December saw 3.78 million housing units sold nationally, with a median price of $382,600. According to NAR, the annual median home price in the United States is expected to rise 1.4 percent, to $395,100, in 2024, and increase 2.6 percent, 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 Mr. Yun.
In the meantime, the Federal Reserve is expected to cut interest rates four times during 2024, leaving 30-year fixed mortgage rates within a range of 6–7 percent for most of the year.
The PHSI for the West was the highest regional overall, with the index escalating over 14 percent in December. The South PHSI increased 11 percent and the Midwest, 5.6 percent. Only the Northeast region saw a drop of 3 percent since December 2022.
Dan Gervais, an agent with Keller Williams in Hyannis, Massachusetts, told The Epoch Times that he wasn’t surprised that the Northeast saw a decline in home sales. “Generally, home prices in the Northeast are higher, and here in Cape Cod, it’s a tourist destination, where homes tend to be even more expensive,” he said.
The Cape also lacks sufficient buildable land for new construction due to water resources, wetlands, the ocean, and cranberry bogs. Many of its towns also have larger land requirements for building.
While Hyannis does offer its share of condominiums, there’s just as much a lack of inventory on multi-family housing. “We have quite a backlog of people who are waiting to buy something here,” he added. “So many people who move off the Cape when they’re young just decide to move back when they’re ready to have a family. It’s a great place for kids to grow up.”
Currently, the median price of a three-bedroom single-family home on Cape Cod is $698,000. “Affordability is tough here,” explained Mr. Gervais, “especially when you’re competing with travelers from wealthier areas like Boston, Connecticut, and New York who are looking for vacation homes.”
Those who do leave the Cape in search of more affordable housing often relocate to the Carolinas, Georgia, or Florida. “Even if the market stays flat, our numbers will go up,” he added.
Mr. Gervais believes inventory will pick up later this year as mortgage interest rates begin to stabilize. “I think it takes a while for people to adjust to a new reality. If they keep waiting for the rates to come down as low as they were a couple of years ago, they could miss out,” he said.
Valerie Saunders, president of the National Association of Mortgage Bankers, agrees. “All signs are pointing to stabilizing rates with continued improvement for 2025 and 2026,” she told The Epoch Times.
While the market is unlikely to see 3–4 percent rates in the near future, Ms. Saunders believes that overall, buying property is a sounder financial decision than renting. “When a person rents, they are actually paying 100 percent interest because all money goes to the landlord with no wealth built,” she noted. “People should not give up on financial stability and growth, waiting for rates to go back into the three’s.”
Sheryl Bowden, president of the Phoenix Realtors Association, told The Epoch Times that she is seeing almost 7 percent more pending sales this week over last week. “While our inventory is not increasing a lot, we are seeing more multiple offers,” she said.
With the current median sales price of $455,000 for a single-family home, the Phoenix market continues to be active. “People are moving in from different states, looking for something more affordable. On the selling side, we also have people relocating or downsizing,” she said. “There are not a lot of parallel moves.”
An agent with Realty Executives in Phoenix, Ms. Bowden herself, was lucky enough to secure a 2.8 percent interest rate on her home a few years ago. Like many in her position, she is not about to sell and end up buying at a higher rate. “Many homeowners are staying put and remodeling instead,” she added.
Some first-time homebuyers are slowly starting to edge into the market, but Ms. Bowden describes them as being “very cautious.” “I would hope that the median prices stay below $500,000 because we need more buyers to move in,” she explained.
Agreeing with NAR’s forecast of a 13 percent jump in home sales this year, Ms. Bowden believes people who are “on the fence” about buying will realize that 6–7 percent interest rates are not a deal-breaker. “I think people just need to wrap their arms around this new norm,” she said. “I can remember rates as high as 14 percent, so those who are sitting and waiting will be losing out because the home prices may keep going up,” she said.
Ms. Saunders is also onboard with NAR’s prediction, saying home sales should increase this year as long as the rates remain steady.
