While at the 2023 Realtors Legislative Meetings, National Association of Realtors Chief Economist Lawrence Yun said the Federal Reserve’s most recent rate hike was unnecessary, though he expects the Fed will stop raising interest rates further.
Yun explained that the Fed’s aggressive rate hikes have hurt regional banks and the housing market, noting that inflation has already started to calm, but rents on apartments and single-family homes remain elevated.
“Inflation will not reignite—inflation will come down closer to 3 percent by the year’s end,” Yun stated. “Inflation has calmed down while rents are still accelerating.”
Yun also said that new home sales are back to pre-pandemic levels, however, existing-home sales are historically low.
“We have to stop the bleeding before improvement takes place,” Yun said. “We need to get more inventory, and the long-term solution is more home building.”
Yun added that apartment construction has reached a 40- to 50-year high. He also forecasts that mortgage rates will fall closer to 6 percent in 2023 and drop below 6 percent in 2024. He expects new and existing-home sales to bottom out in 2023 before an upturn in 2024.