Kevin Sears President | Official website
National Association of Realtors Chief Economist Lawrence Yun shared insights into the housing market's future at the "Residential Economic Issues & Trends Forum" during the NAR 2025 REALTORS Legislative Meetings. Yun projected that existing home sales will rise by 6% in 2025 and 11% in 2026, while new-home sales are expected to increase by 10% in 2025 and 5% in 2026. He also predicted that the median home price will climb by 3% in 2025 and by 4% in 2026, with mortgage rates averaging 6.4% in the second half of 2025 and dropping to 6.1% in 2026.
"The housing market remains very difficult at the moment, as you know," Yun addressed real estate professionals, noting that a delay in recovery is partly due to the Federal Reserve's extended pause on changing its outlook.
In March 2025, the Federal Reserve revised its economic forecast for gross domestic product growth down to 1.7%, with inflation expectations increased to 2.7%. This change impacted the real estate market significantly, according to Yun. "The fast ascent of mortgage rates has really hurt the real estate market," he stated.
Yun explained that rising mortgage rates have increased monthly payment obligations for new home buyers, creating challenges for them despite past clients being satisfied. "Mortgage rates are the magic bullet, and we're waiting and waiting until those come down," he said.
He highlighted that inflation was slightly above target at 2.3% in April but expressed optimism about potential interest rate cuts once inflation is controlled. On inflation drivers, Yun emphasized shelter costs as a major factor: "The shelter cost is already coming down from its recent cyclical peak, and it's trending downward."
Job growth since pre-pandemic levels has been positive, with wage growth (3.8%) surpassing consumer price index increases (2.3%). However, Yun acknowledged difficulties in home sales over recent years: "We've had the lowest home sales in 30 years for two consecutive years."
Despite these challenges, there is hope based on increasing mortgage applications and a strong desire among renters to become homeowners: "There's a light at the end of the tunnel based on recent rises in mortgage applications to buy a home," Yun concluded optimistically.
For further details or access to Yun's presentation slides titled June 2025 Real Estate and Economic Outlook, visit facts.realtor.
The National Association of Realtors represents professionals involved in all aspects of residential and commercial real estate across America.
