{"id":68836,"date":"2020-11-19T10:33:25","date_gmt":"2020-11-19T15:33:25","guid":{"rendered":"https:\/\/blog.myewm.com\/?p=68836"},"modified":"2020-11-19T10:33:25","modified_gmt":"2020-11-19T15:33:25","slug":"nar-after-2020-boost-home-sales-will-leap-next-year","status":"publish","type":"post","link":"https:\/\/blog.myewm.com\/?p=68836","title":{"rendered":"NAR: After 2020 boost, home sales will leap next year"},"content":{"rendered":"
NAR Chief Economist Lawrence Yun predicts existing-home sales will rise 9% in 2021<\/div>\n
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It has been a year of surprises and the \u201cexceptional performance of the housing market\u201d in 2020 is one that will extend into next year, according to the National Association of Realtors\u2019 chief economist, Lawrence Yun.<\/p>\n

Yun gave his customary\u00a0data-packed look\u00a0at the economy and housing market at NAR\u2019s annual conference, the Realtors Conference and Expo, on Tuesday at the Residential Economic Issues and Trends Forum. He predicted higher home sales, higher home prices, stable mortgage rates and continuing\u00a0low inventory.<\/p>\n

\u201cMy economic forecast is that in 2020, it is a recession, but in 2021 with the\u00a0vaccine discovery\u00a0and availability, it will be positive. The interest rate environment will continue to be low, inflation not really a problem. Mortgage rates should remain stable near 3 percent all the way through 2021,\u201d he said.<\/p>\n

Yun predicted the year would end with a with a 20 percent increase in new home sales and a 3 percent increase in existing-home sales compared to 2019. In 2021, he expects new home sales to rise a whopping 23 percent and existing-home sales to rise 9 percent. After a 6 percent rise this year, he expects home prices will rise a more modest 3 percent next year.<\/p>\n

He added, \u201cIn 2021 I think that demand for work from home, demand for larger sized homes, will continue. So home sales [will be] rising 9 percent next year and home prices are in no danger of decline because of housing shortage.\u201d<\/p>\n

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Yun began by noting that President-Elect\u00a0Joe Biden<\/a>\u00a0has said he wants to introduce a $15,000 homebuyer tax credit, which for moderate-income families could be \u201cquite substantial downpayment assistance.\u201d On the other hand, Biden has said he\u2019s considering eliminating the 1031 exchange, which Yun said could \u201cgreatly restrict\u201d housing supply because home builders often buy land through 1031 exchanges.<\/p>\n

\u201cWe need to move away from any policy proposal that would further restrict land sales, because we need more land to turn it into developed lots,\u201d Yun said.<\/p>\n

Yun laid out expectations for U.S. GDP, which he anticipated would come in at -5 percent this year and then rise 4 percent in 2021 \u2014 better than expectations for Britain, Japan, Canada and the Euro zone, but worse than China and South Korea. South Korea instituted an aggressive contact tracing program and was therefore less impacted by the pandemic, according to Yun.<\/p>\n

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Despite the GDP decline, he noted that incomes were higher because of stimulus checks, bigger unemployment checks and Payment Protection Program (PPP) loans, and that the savings rate was higher. He predicted that once the coronavirus vaccine is widely available, that could unleash spending and stimulate the economy.<\/p>\n

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Yun noted that, while jobs have increased by 10 million since the initial 20 million plunge at the beginning of the pandemic, that means the economy needs to add 10 million more jobs to get back to its prior peak.<\/p>\n

He anticipates that by year end, the economy will have lost 7 million jobs and will only gain 3 million jobs next year. Job gains in the last few months have been modest, which he said suggested that new lockdown measures could slow that momentum even further.<\/p>\n

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\u201cIf it is a nationwide lockdown, in my own personal opinion, it will be very harmful for the economy. Of course, we have to balance that out with the health measures, but at least related to the economy, it will be a devastating blow in terms of facing a second recession just as we are trying to come out of it,\u201d Yun said.<\/p>\n

\u201cIf we have more widening of the lockdown, it\u2019s going to turn negative and it will be completely demoralizing. So I hope everyone practices the social distancing measure, putting the mask on, so that we can contain the virus and get the job market going,\u201d he added.<\/p>\n

Inflation has remained low, with consumer prices rising 1 percent this year and likely rising 1.6 percent next year, which means that \u201cthe Federal Reserve can continue to pursue loose monetary policy to provide the necessary funds to the banks so they can lend out to the businesses,\u201d Yun said.<\/p>\n

The housing market has been \u201cremarkable\u201d during the pandemic, according to Yun. Once lockdowns were lifted, people rushed to buy homes, he said.<\/p>\n

<\/p>\n

Yun attributed the strength of the housing market in 2020 in part to mortgage rates declining to an all-time low, below 3 percent. Mortgage rates will average 3 percent this year and will likely average 3.1 percent next year, according to Yun.<\/p>\n

\u201cIt is critical that mortgage rates remain stable. Some of the affordability challenges have been alleviated by falling mortgage rates, but if home prices continued to rise at this level and we don\u2019t get a similar further decline in mortgage rates, then we will begin to chip away at housing affordability,\u201d he said.<\/p>\n

He pointed out that housing starts have been below-average for the past decade, which has resulted in a housing shortage.<\/p>\n

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\u201cThe problem that homebuilders are facing is that lumber prices have risen greatly. So some reduction in tariffs \u2014 for example, Canadian lumber \u2014 could bring the lumber prices down, and thereby give even more incentive for the builders to be more active,\u201d he said.<\/p>\n

He also suggested that a training program could retrain workers from industries that have been hit hard, such as restaurants and hospitality, to be skilled construction workers who both receive higher wages and could alleviate a shortage in such workers.<\/p>\n

Moderator Lorena Pe\u00f1a of the San Antonio Board of Realtors ended the forum by asking Yun how party changes in the White House typically affect the housing market historically.<\/p>\n

Yun said that outside of Washington D.C., people are interested in and passionate about politics, but when it comes to homebuying, it\u2019s the pocketbook that matters.<\/p>\n

\u201cAre the mortgage rates low, are the prices right, is the inventory available? It\u2019s all about the economic factors [and] housing conditions,\u201d he said.<\/p>\n

BY<\/span>\u00a0ANDREA V. BRAMBILA\u00a0| Staff Writer<\/span><\/h6>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

NAR Chief Economist Lawrence Yun predicts existing-home sales will rise 9% in 2021 It has been a year of surprises and the \u201cexceptional performance of the housing market\u201d in 2020 is one that will extend into next year, according to the National Association of Realtors\u2019 chief economist, Lawrence Yun. Yun gave his customary\u00a0data-packed look\u00a0at the […]<\/p>\n","protected":false},"author":1401,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_expiration-date-status":"saved","_expiration-date":0,"_expiration-date-type":"","_expiration-date-categories":[],"_expiration-date-options":[]},"categories":[9,25,59],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.myewm.com\/index.php?rest_route=\/wp\/v2\/posts\/68836"}],"collection":[{"href":"https:\/\/blog.myewm.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.myewm.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.myewm.com\/index.php?rest_route=\/wp\/v2\/users\/1401"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.myewm.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=68836"}],"version-history":[{"count":2,"href":"https:\/\/blog.myewm.com\/index.php?rest_route=\/wp\/v2\/posts\/68836\/revisions"}],"predecessor-version":[{"id":68838,"href":"https:\/\/blog.myewm.com\/index.php?rest_route=\/wp\/v2\/posts\/68836\/revisions\/68838"}],"wp:attachment":[{"href":"https:\/\/blog.myewm.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=68836"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.myewm.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=68836"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.myewm.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=68836"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}