Home Sales Forecasted to Top Last Year’s Totals

Lawrence Yun, Chief Economist of the National Association of REALTORS® (NAR) provided his 2017 midyear forecast and was joined by Jonathan Spader, Senior Research Associate at the Joint Center for Housing Studies at Harvard University, and Mark Calabria, Chief Economist and Assistant to Vice President Mike Pence, in presenting at the 2017 REALTORS® Legislative Meetings & Trade Expo. Discussions included the ongoing strength of the United States job market combined with an upward trend in consumer confidence, and how these factors are expected to contribute to a forecasted 3.5% increase in existing home sales for 2017. 

Yun discussed the challenges presented by low inventory and high prices in some metro areas, while Spader discussed the homeownership rate and Calabria discussed the importance of productivity and the labor force participation rate in encouraging the growth of the economy.

The first quarter of this year represents the best quarterly existing sales pace in ten years with 5.62 million sales.  Yun states that he expects activity to remain on this path and finish the year at approximately 5.64 million.  Yun’s projected 5.64 million in sales would represent the best since 2006 (6.47 million) and 3.5 percent above the total number of existing sales for 2016.  “The housing market has exceeded expectations ever since the election, despite depressed inventory and higher mortgage rates,” says Yun.  “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence are giving more households the assurance and ability to purchase a home,” adds Yun.

Despite the fact that the number of home sales for the U.S. is at a decade high, Yun expresses his belief that the strong labor market should be encouraging an even higher number of sales.  Yun says, “There’s little doubt first-time buyer participation would improve and the homeownership rate would rise if there was simply more inventory.” 

Yun foresees new housing construction to increase by 8.4 percent to 1.27 million for this year, but this is still not quite sufficient to make up for the low number of new homes build in the last few years.  New single-family home sales are estimated to total approximately 620,000 for 2017, an increase of 8.4 percent from 2016. 

“There was a lot of uncertainty at the start of the year, but a very strong first quarter sets the stage for a modest sales increase compared to last year,” said Yun.