Forget the housing market is going to crash! Top real estate experts reveal WHY home prices are likely to STAY STEADY in 2024. Even though U.S. mortgage rates have doubled since before the pandemic and rising home prices have made homeownership more unaffordable, determined home buyers continue to fuel demand and push prices to even higher levels.

Home prices hit yet another record high in April, and frustrated prospective home buyers may be wondering if they should buy now or wait for home prices to fall. The reality, according to six economists who spoke with MarketWatch, is that prices are not likely to fall anytime soon — at least nationally.

Mortgage rates have doubled since before the pandemic, and rising home prices have made homeownership more unaffordable, but the housing market is only getting more expensive as prices show no signs of falling. The economists, who either have worked or presently work in the real-estate industry, said that because demand continues to outpace the supply of properties for sale, it’s unlikely that home prices will fall too much.

The median price of a resale home was at an all-time high of $419,300 in May. With the 30-year mortgage rate averaging 6.87%, the median monthly mortgage payment is roughly $2,750, not including taxes, fees, and property insurance.

5 Real Estate Experts Agree That Home Prices Won't Crash

“The U.S. housing shortage is still lingering based on our estimate of 4.5 million additional housing units that are required to make up for the gaps accumulated from population growth in the last decade,” said Lawrence Yun, chief economist at the National Association of Realtors. “Therefore, home-price declines appear unlikely.”

To be sure, there are a few markets — such as Austin, Texas, and Boise, Idaho — where home prices have declined, Yun said. In May, home prices in Austin were down 2.5% from the same month a year earlier, according to data from the American Enterprise Institute, the lowest among the 60 largest metropolitan areas in the U.S.

“However, with rapid job growth, the temporary improved housing affordability will be short-lived before prices are pushed up to new highs,” Yun added.

Hard to See Price Growth Changing Too Much

“Home prices are unlikely to fall because of continued demographic tailwinds. There are still plenty of millennials looking to get into the housing market,” said Chen Zhao, head of economic research at Redfin.

“However, with affordability being historically bad, price growth could slow in the coming quarters,” Zhao added. “The key piece of uncertainty is whether mortgage rates will fall as expected, and what will happen to prices when that happens.”

The housing market is currently hamstrung by a low level of housing inventory. With fewer homes than keen buyers, bidding wars have emerged, pushing home prices up. Inventory remains suppressed as many homeowners hold off on selling, uninterested in giving up an ultralow, once-in-a-lifetime mortgage rate.

“‘There are still plenty of millennials looking to get into the housing market,’ which is fueling home-buying demand despite affordability waning,” — Chen Zhao, head of economic research at Redfin

If that so-called lock-in effect eases, that could slow the rate at which home prices are rising, Zhao said. Nonetheless, in “either case, it’s hard to see price growth changing too much because affordability strains provide a ceiling while demographic pressures provide a floor,” she added.

It’s All About Inventory

Inventory is the most important piece of the housing puzzle, said Andy Walden, vice president of enterprise research at ICE Mortgage Technology.

“When it comes to home prices today, it’s all about inventory,” Walden said. “In markets where prices have softened at various points over the past two years, the common denominator has been inventory returning to or near prepandemic averages.”

The ICE home-price index for May shows prices falling in markets where inventory has spiked over the last 12 months, he added, such as in parts of Florida and Texas. For instance, in Cape Coral, Fla., inventory is up 87% over the last year.

“‘When rates decline and begin to improve affordability, the result has been increased demand … and subsequently stronger home prices. It’s a cyclical Catch-22,’” — Andy Walden, vice president of enterprise research at ICE Mortgage Technology

But inventory is still low in other parts of the country, he said, which is keeping prices high. And a drop in mortgage rates won’t necessarily help housing affordability, Walden said.

“In recent years, we’ve witnessed a pattern emerge: When rates decline and begin to improve affordability, the result has been increased demand … and subsequently stronger home prices,” he explained. “It’s a cyclical Catch-22 that will likely keep a floor under home prices in the near term, especially in the inventory-starved Midwest and Northeast.”

Nothing to Suggest a Major Home-Price Drop

But expect home-price growth to moderate further in the coming months, said Lisa Sturtevant, chief economist at Bright MLS, a real-estate-listings database.

“There is nothing to suggest a major home price drop in the U.S., but mortgage rates near 7% and home prices at record highs in many markets [both mean] that affordability is a growing challenge in 2024,” Sturtevant said. “As more and more home buyers hit the affordability ceiling and more inventory comes onto the market, there will be less upward pressure on home prices.”

Only a Significant Shock to the U.S. Economy Would Affect Home Prices

To be sure, home prices could crash — but only in the event of an economic catastrophe, said Selma Hepp, chief economist at the real-estate-data company CoreLogic.

“For home prices to fall, there would need to be a significant shock to the U.S. economy that would lead to massive job losses,” she said. “Still, as we saw during the pandemic, the continued imbalance between pent-up demand and lack of supply suggests that home prices have a floor and are unlikely to fall notably.”

Prepare for a Prolonged Period of Unaffordable Housing

The bottom line is that people looking to buy homes should get used to the new normal, the economists said. Mortgage rates at 3% were an aberration, and the historical average for the 30-year mortgage rate is around 6%.

Unlike during the Great Recession of 2007-09, when home prices crashed as a result of irresponsible lending and the subprime-mortgage crisis, “significant price declines are very unlikely this time around because market conditions are quite different,” said Ken Johnson, a real-estate economist at Florida Atlantic University.

“‘Significant price declines are very unlikely this time around, because market conditions are quite different,’” — Ken Johnson, real-estate economist at Florida Atlantic University

“The last housing peak was brought about by many factors, namely a huge oversupply in housing units,” he said. “Once prices began to fall, a foreclosure crisis broke out, creating an environment in which prices only had one path — significantly downwards.”

This cycle is different in that the U.S. has a steadily worsening housing shortage. As the population has increased, the housing shortage has grown to 4.5 million, according to a recent analysis from the real-estate brokerage Zillow.

“This time around, there is a major shortage in the supply of housing units, and the likelihood of significant price declines is very limited despite currently high mortgage rates,” Johnson said.

And while home prices may flatten and even fall in some markets in states like Florida, homeowners across the country should brace for “a prolonged period of unaffordable home prices relative to income levels,” Johnson said.

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The housing market has been a whirlwind in recent years. A pandemic-fueled buying frenzy met with historically low mortgage rates sent prices skyrocketing. Now, with rising interest rates and inflation concerns, many are wondering what's next for the housing market. A recent report from Bank of America economists paints a picture of a sluggish market that won't see significant changes until at least 2026. Let's delve into the reasons behind this prediction and what it might mean for potential homebuyers.

Housing Market Predictions for 2026: A Stalled Market with a Glimmer of Hope

A Post-Pandemic Hangover:

The economists point to a “one-time shift” in demand during the pandemic as a key factor. With people spending more time at home, the desire for a dedicated workspace and increased square footage drove many towards homeownership. This surge in demand, coupled with low-interest rates, created a competitive market with rapidly rising prices. However, as the pandemic waned and interest rates climbed, the market dynamics shifted.

The Lock-In Effect:

One of the main reasons economists predict a slow market is the “lock-in effect.” Homeowners who bought during the low-interest-rate period are likely hesitant to sell. Moving would mean giving up their rock-bottom mortgage for a significantly higher rate in today's market. This creates a situation where sellers stay put, reducing the overall inventory available for purchase. The dearth of available homes further frustrates potential buyers and creates an environment where bidding wars and inflated prices can still occur.

A Wait-and-See Approach for Buyers:

The combination of rising interest rates and stagnant wages is making it difficult for many potential buyers to enter the market. With affordability becoming a major concern, many are taking a wait-and-see approach, hoping for a price correction or a decrease in interest rates. This further dampens market activity and creates a self-perpetuating cycle – low sales discourage new listings, keeping inventory low and prices propped up.

A Slow Climb and a Potential Dip:

The Bank of America economists predict a continued rise in home prices in the next couple of years, albeit at a much slower pace than during the pandemic boom. They project a 4.5% increase in 2024 and a 5% increase in 2025. However, they believe prices might dip slightly in 2026, reflecting the fading effects of the pandemic-driven demand surge. This potential dip could incentivize some buyers who have been waiting on the sidelines.

A Light at the End of the Tunnel?

While the overall outlook seems sluggish, there are some potential glimmers of hope. The economists acknowledge that the current “moribund” (stagnant) state of sales could incentivize some buyers to enter the market, especially with improving credit conditions and a potential shift towards a less restrictive monetary policy by the Federal Reserve.

Additionally, the growing millennial demographic, the largest generation in US history, is expected to continue to drive housing demand in the long run. Millennials are reaching prime homebuying years, and their sheer numbers suggest a significant and sustained force in the market.

The Big But: Affordability Concerns Remain

Despite these potential positives, affordability remains a major hurdle. Even with a projected slowdown in price growth, wages are unlikely to keep up, making it difficult for many to qualify for a mortgage or compete in a bidding war. The Bank of America economists also caution that their predictions assume an overall economic slowdown, which could further impact the housing market. A recession, for example, could lead to job losses and a decrease in consumer confidence, further dampening demand.

Navigating the Housing Market in 2026 and Beyond

Overall, the Bank of America report paints a picture of a housing market in a holding pattern until at least 2026. While potential buyers might welcome a potential price correction, affordability concerns are likely to persist. For those considering entering the market, careful planning, realistic budgeting, and a long-term perspective will be crucial.

It may also be helpful to consider alternative options such as starter homes or more affordable areas. Staying informed about economic trends, housing market updates, and government programs that can assist first-time homebuyers will also be essential in making informed decisions.

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The summer sun bakes the U.S. housing market, transitioning from its peak season. While analysts predict some softening in the latter half of 2024, most agree on positive national growth for the year, extending the appreciation streak to 13 years. But what lies ahead in 2025? Here, housing experts offer their diverse insights:

Experts Forecast the 2025 Housing Market

The Bullish Outlook: Goldman Sachs Bets on Supply Constraints

Goldman Sachs, known for its optimistic outlook, predicts a 4.4% national home price increase in 2025. Their reasoning goes beyond just a lack of available housing stock. They acknowledge that rising interest rates could dampen demand from some potential buyers. However, Goldman Sachs believes the supply shortage will be a more powerful force, pushing prices upwards.

Decades of underbuilding have created a structural imbalance in the housing market. The demand for homes, fueled by demographics like millennials entering prime homebuying years, continues to rise.

Meanwhile, new construction has lagged, failing to keep pace with this growing demand. This persistent mismatch between supply and demand is likely to be the dominant factor influencing home prices in 2025, according to Goldman Sachs' forecast.

The Cautious Approach: Moody's Analytics Sees Affordability Hurdles

Moody's Analytics takes a more cautious stance, forecasting a meager 0.3% national price rise for 2025. Their primary concern is affordability. The turbocharged housing market of the pandemic era, fueled by historically low interest rates, drove a significant increase in home prices.

Now, with interest rates rising and inflation on the upswing, many potential buyers are finding themselves priced out. Moody's Analytics believes this affordability squeeze will act as a significant headwind for home price growth in the near future.

First-time homebuyers, a critical segment of the market, will be particularly impacted. Even existing homeowners looking to upgrade may find themselves facing sticker shock and larger monthly mortgage payments. This affordability hurdle is likely to keep a lid on significant price increases in 2025, according to Moody's Analytics.

Beyond National Numbers: Regional Variations Take Center Stage

Experts warn against getting fixated on national forecasts. Regional markets will likely experience a diverse performance.

• Sunbelt Slowdown: Areas heavily reliant on tourism or facing economic slowdowns, particularly in the Gulf Coast states like Florida and Texas, might see price declines as potential buyers grapple with a combination of factors. Rising interest rates and inflation, coupled with a possible slowdown in tourism or local industries, could make them reconsider their purchasing power. For example, vacation home markets or retirement destinations could be particularly vulnerable if economic conditions worsen.
• Inventory Squeeze: Markets with limited housing stock, especially in desirable locations with strong job markets and high quality-of-life factors, could experience continued growth fueled by competition among buyers. Think tech hubs like Austin, Seattle, or Denver, where a constant influx of new jobs and a limited supply of housing has driven prices upwards for years. This trend is likely to persist in 2025, potentially outpacing the national average increase.

Emerging Market Movers: Keep an Eye on the Labor Market and Inventory

Two key metrics will be crucial for gauging regional market health:

• Labor Market: A weakening labor market, particularly in areas heavily reliant on specific industries, could signal a cooling market as potential buyers face job insecurity. This is especially concerning for industries that are sensitive to economic downturns, such as manufacturing or energy. If companies in these sectors start laying off workers, it could lead to a decrease in buyer demand and put downward pressure on home prices. Conversely, a strong labor market with low unemployment rates and rising wages would bolster buyer confidence and potentially lead to continued price growth.
• Active Inventory: A rise in available homes suggests more options for buyers, potentially leading to price stabilization or even dips in markets with previously low inventory. This can happen for a few reasons. One possibility is that homeowners who previously held off on selling due to a lack of alternatives in the market may decide to list their properties if they see more inventory become available. Additionally, new construction activity could also contribute to a rise in active listings. If the number of homes for sale starts to approach or even exceed buyer demand, it could tip the scales in favor of buyers and lead to a more balanced market, with prices potentially stagnating or even declining in some areas.

The Local Market: Where Insights Become Actionable

National forecasts provide a national temperature, but local markets have their own weather patterns. To make informed decisions in 2025, delve into your specific market. Research local employment rates, new construction activity, and listing inventory levels. These details, coupled with insights from experienced local real estate professionals, will equip you to navigate the 2025 housing market with confidence, whether you're a buyer, seller, or simply curious about the future.

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The housing market has experienced a remarkable trend recently, with the median home sale price reaching new heights for the ninth consecutive week. This impressive growth, driven by various factors, provides a complex yet fascinating snapshot of the current state of the real estate market. Here are the latest trends.

Current Trends in Home-Sale Prices

According to Redfin, as of the four weeks ending July 7, the median U.S. home-sale price reached an all-time high of $397,482, marking a 4.7% increase compared to the previous year. This surge represents the most significant growth in over four months. Despite elevated mortgage rates suppressing homebuying demand, sale prices have remained persistently high. The market's dynamics have led to pending home sales dropping by 3.5% year over year and mortgage-purchase applications falling by 13%.

Factors Contributing to High Prices

Several factors contribute to the sustained high prices in the housing market:

• Low Inventory: Inventory levels have historically been low, which has helped maintain high prices. Although inventory is rising year over year, it remains at a historically low level.
• Lagging Indicators: Final sale prices often reflect deals made a month or two earlier, indicating that the current high prices are a result of past transactions.
• Elevated Mortgage Rates: High mortgage rates have decreased homebuying demand, yet prices have stayed high due to limited supply.

Signs of Slowing Price Growth

Despite the recent record highs, there are indications that price growth may soon decelerate:

• Homes Selling Below List Price: The typical home is selling for 0.4% less than its asking price, a trend not seen since the start of July 2020.
• Reduced Sales Above Asking Price: Only 32% of homes are selling above their asking price, down from 36% a year ago, the lowest share at this time of year since 2020.
• Increased Inventory: New listings are up 7.3% year over year, and the total number of homes for sale has increased by 18.3%. More than 60% of these homes have been listed for at least a month without going under contract.

Market Dynamics and Buyer Behavior

Mortgage rates have remained significantly higher than pandemic-era lows for nearly two years, prompting many sellers to list their homes despite the high rates. This increase in inventory has led to homes sitting on the market longer than usual. Buyers have become more selective, often backing out or negotiating prices down for even minor issues. As Julie Zubiate, a Redfin Premier agent in the Bay Area, notes, “Homes are sitting longer than they usually do this time of year, which has led to some—but not all—homes selling for a little bit less.”

Segments Still Thriving

Despite the general trend of homes sitting longer on the market, there is still a segment that is performing exceptionally well. Move-in ready homes with large backyards in desirable school districts continue to attract multiple offers and often sell above the asking price. This indicates that while the overall market may be cooling slightly, certain properties remain highly sought after.

Housing Market Highlights: Four Weeks Ending July 7, 2024

Redfin’s national metrics provide a comprehensive overview of the housing market, including data from over 400 U.S. metro areas. This information is based on homes listed and/or sold during the specified period. Weekly housing-market data goes back to 2015 and is subject to revision. Here are the key highlights for the four weeks ending July 7, 2024:

• Median Sale Price: The median sale price reached $397,482, marking a 4.7% year-over-year increase. This is an all-time high and the biggest increase in four months.
• Median Asking Price: The median asking price was $406,000, reflecting a 5.4% year-over-year rise. Despite the increase, this is the lowest level in three months.
• Median Monthly Mortgage Payment: The median monthly mortgage payment stood at $2,742 with a 6.95% mortgage rate, a 5.3% increase year-over-year. This is $95 below the all-time high set during the four weeks ending April 28.
• Pending Sales: Pending sales totaled 83,410, which is a 3.5% decrease year-over-year.
• New Listings: New listings amounted to 93,452, showing a 7.3% increase year-over-year.
• Active Listings: The number of active listings reached 970,503, an 18.3% year-over-year increase. This is the smallest increase in over two months.
• Months of Supply: The months of supply was 3.6, up 0.8 points year-over-year. A balanced market typically has 4 to 5 months of supply; thus, the current figure indicates seller’s market conditions.
• Share of Homes Off Market in Two Weeks: Approximately 41.1% of homes were off the market within two weeks, down from 45% a year ago.
• Median Days on Market: The median days on market was 32 days, an increase of 4 days year-over-year.
• Share of Homes Sold Above List Price: Only 31.9% of homes were sold above their list price, down from 36% a year ago.
• Share of Homes with a Price Drop: The share of homes with a price drop increased by 1.8 points to 6.5%.
• Average Sale-to-List Price Ratio: The average sale-to-list price ratio was 99.6%, down 0.4 points year-over-year.

Conclusion

The current housing market presents a mixed picture. While home-sale prices have hit record highs for nine consecutive weeks, signs suggest that this trend may not continue indefinitely. Rising inventory, homes selling below list price, and a more selective buyer base indicate potential shifts in the market. However, certain segments, such as move-in ready homes in prime locations, continue to thrive. Sellers need to adapt to these evolving conditions, ensuring their homes are well-prepared, accurately priced, and effectively promoted to attract the right buyers.

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The housing market continues to show positive signs! A new report from CoreLogic reveals a significant increase in homeowner equity across the United States in the first quarter of 2024. This positive trend comes amidst rising home prices and offers welcome relief to many homeowners who were previously underwater on their mortgages. Let's dive deeper into the report's findings and explore what they mean for the current housing market.

Homeowner Equity Surges! US Sees $1.5 Trillion Gain in Q1

The CoreLogic Homeowner Equity Insights report is a quarterly publication that covers homeowner equity at the national, state, and metro levels, including negative equity share and average equity gains. This report features an interactive view of the data through digital maps, analyzing CoreLogic homeowner equity data for the first quarter of 2024.

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. This situation can arise from a decline in home value, an increase in mortgage debt, or both. This data set includes only properties with a mortgage and excludes those owned outright.

Homeowner Equity in Q1 2024

According to CoreLogic's analysis, U.S. homeowners with mortgages (approximately 62% of all properties) experienced an increase in equity totaling $1.5 trillion from the first quarter of 2023, reflecting a 9.6% year-over-year gain. Source: 2016 American Community Survey

Year-Over-Year U.S. Home Equity Changes, Q1 2024

In Q1 2024, the total number of mortgaged residential properties with negative equity decreased by 2.1% from the previous quarter, representing 1 million homes or 1.8% of all mortgaged properties. Year-over-year, negative equity fell by 16.1% from 1.2 million homes or 2.1% of all mortgaged properties in Q1 2023.

Home equity is influenced by changes in home prices. Borrowers near the negative equity threshold (+/- 5%) are likely to move into or out of negative equity as home prices fluctuate.

For instance, a 5% increase in home prices would allow 110,000 homes to regain equity, while a 5% decrease would push 153,000 homes underwater. The CoreLogic HPI Forecast predicts a 3.7% increase in home prices from March 2024 to March 2025.

U.S. Negative Home Equity Changes Year Over Year, Q1 2024

California led the U.S. in annual equity gains for Q1 2024. As one of the most expensive states with high housing demand, California homeowners saw the largest equity gain at $64,000, with those in the Los Angeles metro area netting $72,000 year-over-year.

Significant gains were also seen in the Northeast, including New Jersey ($59,000), which has been in the top three for annual appreciation according to CoreLogic's monthly Home Price Insights report.

National Aggregate Value of Negative Equity: Q1 2024

At the end of Q1 2024, the national aggregate value of negative equity was approximately $321 billion, down $2.8 billion or 1% from Q4 2023, and down $17.6 billion or 5% from Q1 2023. Negative equity peaked at 26% of mortgaged properties in Q4 2009.

Negative Equity Share by U.S. State, Q1 2024

“With home prices continuing to reach new highs, owners are also seeing their equity approach the historic peaks of 2023, close to a total of $305,000 per owner. Importantly, higher prices have also lifted some 190,000 homeowners out of negative equity, leaving only about 1.8% of those with mortgages underwater.

Home equity is key to mortgage holders who have seen other homeownership costs soar, including insurance, taxes and HOA fees, as a source of financial buffer.

Also, low amounts of negative equity are welcomed in markets that have shown price weaknesses this spring, such as Florida (1.1% of homes underwater) and Texas (1.7% of homes underwater) — both of which are below the national rate — as further price declines could drive more homeowners to lose their equity.” – Dr. Selma Hepp, Chief Economist for CoreLogic

National Homeowner Equity

In Q1 2024, the average U.S. homeowner gained approximately $28,000 in equity over the past year. California ($64,000), Massachusetts ($61,000), and New Jersey ($59,000) posted the largest average equity gains. No states experienced annual equity losses.

CoreLogic also provides homeowner equity data at the metropolitan level, depicting changes for ten of the largest cities by housing stock. Negative equity has decreased nationwide, with Las Vegas having the lowest negative equity share at 0.6% of all mortgages. It is followed by LA (0.7%), San Francisco (0.8%), and Miami (0.9%).

Summary

CoreLogic began reporting homeowner equity data in Q1 2010, at a time when the equity outlook for homeowners was bleak. Since then, many homes have regained equity, and the outstanding balance on most mortgages is now equal to or less than the loan balance.

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Housing slump ending soon? Experts say prices stabilize & sales rise in late 2024, strong recovery by 2025. Economic and real estate specialists are predicting a housing market recovery beginning in late 2024 and extending through 2025.

This brings positive prospects for plumbing manufacturers, distributors, and construction trades involved in the housing market. The United States is seeing increased population and job growth, shifting demographics, and cooling inflation, all contributing to higher home sales, although some challenges remain in the commercial and multifamily real estate sectors.

Housing Market Recovery Predictions

Job Growth and Housing Demand

Job growth this year has been robust, driving long-term real estate demand. A strong job market typically translates to better wages, leading to increased housing demand. The Bureau of Labor Statistics (BLS) reported an encouraging update in March: employers added 303,000 jobs, surpassing the average monthly gain of 231,000 over the past year.

The BLS also notes that total payroll jobs have increased by 5 million compared to pre-COVID-19 levels. Many workers who have taken new jobs this year are planning significant lifestyle changes, including purchasing a new home or car, according to a ZipRecruiter survey.

Cooling Inflation and Mortgage Rates

As inflation is expected to cool, lower mortgage interest rates over the coming months will help boost existing home sales. The National Association of Realtors (NAR) expects existing home sales to rise because 30-year mortgage rates have likely peaked, and the Fannie Mae Home Purchase Sentiment Index is improving.

The index is above 70 percent after bottoming out at around 57 percent in 2022, according to NAR chief economist Lawrence Yun, Ph.D. In March, he presented a positive real estate outlook at the Plumbing Manufacturers International (PMI) Washington Legislative Forum and Fly-In. In its April housing market forecast, Fannie Mae projected that mortgage rates will drop to 6.4 percent by the end of this year and continue declining through 2025.

Experts believe that stabilizing rent prices will help reduce the Consumer Price Index (CPI); this price relief could enable the Federal Reserve to lower interest rates. Yun noted the CPI fell to 3.1 percent in January, down from its 2022 peak of around 9 percent.

Strong Housing Starts Boost Building-Related Product Sales

Following a recessionary phase that began earlier than the broader economy, the housing market is poised for recovery. Permits for single-family housing starts are rising nationwide, with some states experiencing accelerated growth. NAR expects housing starts to increase by 1.2 percent to 1.43 million in 2024 and by 4.9 percent to 1.5 million in 2025.

New home construction will be especially strong in Texas, Florida, and Indiana, where single-family housing unit permits have risen by 44 percent, 27 percent, and nearly 50 percent, respectively, according to ITR Economics’ Connor Lokar during PMI’s April Market Outlook LIVE presentation. This positive housing trend will lead to increased wholesale volumes and boosted customer orders for plumbing fixtures, fittings, and other construction-related products, he says.

NAR projects that existing home sales will grow by 9 percent to 4.46 million in 2024, and by an additional 13.2 percent to 5.05 million in 2025.

Local governments are getting creative to address the demand for more housing by reconsidering lot size requirements, zoning laws, and other policies. For instance, the Washington Post reports that Sheboygan, Wis., is collaborating with local employers, including PMI member Kohler Co., to build 600 entry-level homes priced between $230,000 and $250,000 to attract more front-line manufacturing workers. The county will also offer downpayment assistance to buyers.

Other cities — such as Portland, Ore.; Austin, Texas; and St. Paul, Minn. — have changed zoning laws to allow building up to four homes on one lot.

Growing Population and Life Changes to Sustain Home Sales

The increasing population and changing life events, such as retirement and job changes, are creating positive shifts in the housing market.

U.S. population growth is on the rise, contributing to pent-up home-selling demand. According to the U.S. Census Bureau’s January estimates, the nation’s population grew by 1.6 million to a total of 334.9 million, reaching its highest level since the pandemic.

Yun highlighted life changes expected over the next two years that will boost total home sales to pre-COVID levels: 7 million births, 3 million marriages, 1.5 million divorces, 7 million Americans turning age 65, 4 million deaths, 5 million new jobs created, and 50 million job switches.

Generational buying habits are also evolving. Millennials have overtaken baby boomers as the largest group of homebuyers at 38 percent, and Gen X buyers are most likely to purchase multigenerational homes at 19 percent, according to the NAR 2024 Home Buyers and Sellers Generational Trends report. Baby boomers remain the largest generation of home sellers at 45 percent.

Millennials are selling because their homes are too small or their family situations have changed, while baby boomers and Silent Generation members (born between 1928 and 1945) are selling to move closer to family and friends or because their homes are too large.

Challenges Still Ahead

Some challenges and concerns remain. Outlooks in the commercial, multifamily, and remodeling sectors are less favorable, especially as the overall economy begins to soften later this year.

Currently at around 3.5 percent, the U.S. inflation rate is unlikely to return to the below 2 percent levels seen before the COVID-19 pandemic, according to Lokar, due to factors embedded in the economy, such as government spending and labor costs. Commercial and nonresidential markets will lag, and multifamily housing demand will decrease in the short term.

Lokar notes a positive outcome from slow economic growth at the end of 2023 and early 2024: less supply chain pressure. While supply chain recovery is creating excess inventory issues, building material and plumbing product retail sales should start to progress in late 2024 with improved housing fundamentals.

After a challenging period of tight housing inventory, high home prices, and elevated mortgage interest rates, it’s encouraging to see rising housing starts and strong job growth. Although the economy may face obstacles, using the forecasts from real estate and financial experts can help us adapt and innovate, as our industry has done for decades.

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