NAR’s Yun Says Housing Market Doing Well, May Normalize in 2022
SAN DIEGO (November 13, 2021) – (Copyright NATIONAL ASSOCIATION OF REALTORS® – Reprinted with permission).
According to NAR Chief Economist Lawrence Yun, the outlook for the residential real estate market, which performed exceptionally well during the height of the pandemic, continues to be promising.
Yun delivered the assessment yesterday morning at the National Association of Realtors® ‘2021 REALTORS CONFERENCE & EXPO’ in San Diego, California.
“All markets are seeing strong conditions, and home sales are the best in 15 years, Yun said. “The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.”
An unknown, he said, is how remote work opportunities will play out in the future, and he advised that the industry keep that in mind.
“We are only in the first innings of work-from-home options,” Yun said. “People have not fully digested the work-from-home-flexibility model yet in determining home size and locational choice.”
Yun said that even though there may be a decline in sales in 2022; he still forecasts home sales will outdo pre-pandemic levels. His prediction, he noted, is based on an anticipation of more inventory in the coming months. That supply will be generated partly from new housing construction – already underway – and from the conclusion of the mortgage forbearance program, which will cause several homeowners to sell.
“With more housing inventory to hit the market, the intense multiple offers will start to ease,” Yun said. “Home prices will continue to rise but at a slower pace.”
The job market naturally struggled during the pandemic, however, it has turned a corner and continues to make incremental progress, Yun explained. Since the nation emerged from lockdown, 18 million jobs have been created. The unemployment rate of 4.6% implies the U.S. economy should return to normal. However, the country is still facing an employment shortage, he clarified. There are 4 million fewer jobs now than the number of jobs before the arrival of COVID-19.
Yun noted that some areas in the nation are thriving and are already fully recovered. This is the case for the respective job markets in places like Idaho and Utah. Both states reported having more jobs than at the beginning of the pandemic.
While real estate has thrived, Yun says there are signs that a more normal and predictable market is on the horizon. Home sales have surged over the past year in an uncharacteristic manner, with many receiving multiple bids after only being on the market for a short period. However, the housing sector will settle down but at above pre-pandemic levels.
Yun projected that mortgage rates, currently at 3.0%, will increase by 3.7% in the coming months, which he attributes to high inflation. Home prices rose by 12% on average in 2020 and 2021, while inflation rose 3%.
“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”
The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.