At the recent Realtors® Legislative Meetings in Washington, D.C., National Association of Realtors® (NAR) Chief Economist Lawrence Yun took a moment to laud NAR members for their work. It deserves a wider circulation than just the meeting’s audience. 

 “Thank you, everyone here, for trying to shift this aspiration into future reality,” he said. Over the past two years, it hasn’t been easy. Northeast Tennessee Association of Realtors (NETAR), several members and staff were in the audience. 

Residential sales in 2023 and 2024 were the lowest they’ve been in 30 years, Yun said at the Residential Economic Issues & Trends Forum. While that fits the overall market pattern, not all of it fits the local market. Locally sales in those two years were off the pace that began in 2012. But they are not the lowest in 30 years.  

In May local sales were down 4.7% for the first five months of last year. The long-term trend is there were 42 fewer sales in May than there were in May 2018 – the region’s pre-pandemic benchmark. What that suggests is that the local market has adjusted to its pre-pandemic level. There may be some ups and downs in the coming months, so the true test won’t come until we get the 2025 annual sales total.  

While there’s a range of factors working against would-be homeowners today, there’s still a lot of pent-up demand on the local and national levels. 

What’s encouraging is more inventory coming online, and mortgage rate cuts expected in the fall. Yun is forecasting a nationwide 6% increase in existing home sales in 2025 and an 11% increase in 2026. New-home sales, which have been a bright spot thanks to generous builder incentives, are expected to be up by 10% in 2025 and by 5% in 2026. And Yun predicts the median price nationally will continue to rise—by 3% in 2025 and by 4% in 2026. 

Local sales have a way to go to get to the annual outlook number. On the other hand, the price picture is brighter. The five-month trend is up 7.6%.  

“Mortgage rates are the magic bullet, and we’re waiting and waiting until those come down,” Yun said. 

Inflation was 2.3% in April, he said, slightly higher than the Federal Reserve’s 2.0% implicit target. “The Fed will cut interest rates once inflation is fully under control. We’re not there yet, but we’re very close.” 

In every state, as well as Puerto Rico, Yun said, median home prices have risen significantly over the past five years, increasing the gap between the median net worth of homeowners and that of renters. He estimates a 45% gain in the median net worth of owners starting in 2019. Renters’ median net worth has increased by only 36% since 2019 and stagnated over the past three years, Yun says. And a staggering gap remains between the two: The median net worth of owners is estimated at 43 times that of renters. 

What will it take to get more people on the path toward wealth building? 

Danielle Hale, chief economist for realtor.com®, also spoke at the forum and joined Yun in thanking NAR members for their efforts to expand homeownership. 

With the homeownership rate for younger Americans slipping, Hale said Realtor.com has analyzed the inventory gap to address potential solutions. She said the nation needs more homes priced at $250,000 and below.  

Despite economic risks, including an increase in the national debt since 2018, there are many reasons to be optimistic about the future direction of home sales, Yun said. The U.S. has added 7 million jobs since the COVID-19 lockdown, and wage growth (3.8%) is currently outpacing the consumer price index (2.3%). Serious mortgage delinquencies remain historically low—and recent increases in mortgage applications indicate that interest is strong, even if many buyers are in waiting mode, he said.  

Locally, the growth rate of new jobs has softened, but they are still ahead of where they were last year. And, when you compare the total, local employers have added about 1,500 jobs since this time last year.  

Yun is spot-on. There’s light at the end of the tunnel.