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Residential Property Developments

NAR economist projects dip in home sales next year, followed by rebound in 2024

The National Association of Realtors projects a slight decline in 2023 for housing sales, followed by an rebound in 2024.

National Association of Realtors Chief Economist Lawrence Yun encouraged residential Realtors to hang in there, the future is bright. Speaking over the weekend at NAR’s Fall Summit in Orlando, Yun said by 2024, the real estate market should be steady again. He attributes expected improvement to continued low inventory and an expected improvement in the economy. Even if inflation continues at its current 7% rate, population growth, “prices will remain relatively stable across the country.”

Yun called 2022 a transition year and said December data will show “it’s the third and fourth quarters that are really ugly.” Across the country, pending home sales have been declining, inventory continues at a record low, homes are staying on the market longer and mortgage interest rates more than doubled from previous lows. There’s no reason to panic or expect a repeat of the 2008 housing market crash and crisis, Yun told attendees at NAR NXT, The REALTOR® Experience.

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“The number of distressed property sales are basically nonexistent,” he said. “Prices are still holding on because inventories are very low,” and signs are showing that the drastic change and decline in the housing market throughout 2022 may be short-lived.

NAR Chief Economist Lawrence Yun gave his annual housing market forecast at the association's annual conference in Orlando last weekend.

Last week, the annual inflation rate dropped to 7.7% in October from 8.2% in September and a high of 9.1% in June. The news may mean that mortgage rates have topped out, Yun said. The key U.S. 30-year mortgage rate average declined to 6.62% on Nov. 10 from 7.22%. Rates were as low as 2.74% in January 2021 and remained below 4% until March of this year when they steadily moved up.

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While that’s a positive sign, Yun said, what is happening right now is that “new listings are not popping out. You don’t have a buyer and you can’t get a seller. There’s a tremendous degree of anxiety out there. … The market condition has been quite difficult this year and may get more difficult” in the short term.”

Homes are staying on the market longer – weeks and months instead of days – and pending sale prices are being negotiated lower before closing, Yun said. Multiple offers are still a thing and prices are still high and holding on because of the low inventory.

Pending home sales fell for the fourth consecutive month in September, declining month-over-month and year-over-year in all regions of the U.S., according to NAR. Pending Home Sales for October 2022 will be released on Wednesday, November 30, 2022, at 10:00 a.m. Eastern.

In Florida, new listings were down 30% in Orlando and 28% in both Tallahassee and Tampa for the four weeks that ended Oct. 22, according to national residential real estate broker Redfin.

The 2023 housing market may be tough as well especially if inflation continues at the current rate, Yun said. Pending home sales have been declining to pre-Covid and Covid crisis levels, he said. “It looks like we are almost at the same as the lockdown period of 2020.”

Single-family housing starts declined this year for the first time in a decade.

Low inventory and a stabilizing of inflation will push the housing market forward, Yun said. “We should be concerned about potential housing shortage once the mortgage rate begins to go down,” he said. “We just simply don’t have enough inventory.”

“We are not anticipating any homebuilders to build those empty homes,” Yun said. “The builders are panicking. There are canceled contracts. So, this year there will be some reduction in single-family home construction. Event last year it was insufficient. In fact, in 10 prior years the building activity has been insufficient. … there is no oversupply.”

In the Orlando area, inventory has been rising with an increase of 1.8% in September – the fifth straight month of inventory increases, according to a Nov. 9 report from the Orlando Regional REALTOR® Association (ORRA). Homes spent an average of 31 days on the market in September, up 14.8% from August when the average was 27 days. New listings decreased by 27.1% from August to September, with 3,318 new homes on the market in September.

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In 2023, Yun expects home sales to decline by 7%, while the national median home price will increase by 1%, with some markets experiencing price gains and others price declines.

He also projects a strong rebound for housing in 2024, with a 10% jump in home sales and a 5% increase in the national median home price, assuming the 7% inflation rate remains. “2024, long-term path looks bright.”

“Hang in there for this year’s difficulty and maybe next year still under transition but after that everything should be a better situation.”

More than 12,000 Realtors® and industry stakeholders from all 50 states, several U.S. territories and 60 countries were registered to attend the conference last weekend at the Orange County Convention Center, though travel delays from Hurricane Nicole forced many to participate virtually.

Have a tip about Central Florida development? Contact me at Newsroom@GrowthSpotter.com or (407) 420-6261. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.


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