Last week, Realtors from South Carolina, North Carolina, Tennessee, and Kentucky gathered in Savannah for a unique event—the NAR Region IV Conference. The highlight of the conference, at least from the perspective of a wannabe economist like me, was Dr. Lawrence Yun’s 2024 forecast.
Interest rates have had a negative effect on real estate. Residential and Commercial Realtors are feeling it. Yun’s forecast was focused on residential, but he signaled better conditions for commercial real estate as well.
To set the table, Yun observed that mortgage rates are about 1% higher, compared to bond rates, in anticipation of further rate increases by the Federal Reserve. He said that when the Federal Reserve backs off on rate increases, mortgage rates will drift downward naturally.
The day after Yun’s report in Savannah, Federal Reserve Chairman Jerome Powell signaled that the Fed will likely stand pat on rates at their next meeting.
Yun talked about how NAR has been lobbying the Fed to recognize that rate increases are creating upward pressure on inflation rather than reducing it. He pointed out that inflation for most items in the inflation basket of goods is where the Fed wants it but that rent, which is 30% of the basket of goods, is still at 7.4%. Yun points to interest rates as the cause.
So, what was Yun’s forecast? He said that the 30-year mortgage rate will fall to “near 6%” by early Spring 2024. He also forecasted that rents will calm down further, reducing inflation. And he forecasted that total home sales will rise in 2024 to 5.9 million, up from 5 million this year. However, Yun said that new construction will constitute 900,000 of those home sales, up from about 700,000 this year.
To support his positive forecast, Yun pointed to continued pent up demand by sellers who can’t wait longer to sell their homes, increasing existing inventory in the next two years. He cited these factors that will occur in the next 24 months:
- 7 million new-born babies
- 3 million marriages
- 1.5 million divorces
- 7 million people will turn 65
- 4 million people will die
- 4 million net new jobs created
- 50 million job changes
Attend the local forecast with John Hunt
National forecasts are great, but what will the market be in the Western Upstate? Your Western Upstate Association of Realtors has that covered.
Attend the WUAR Annual Meeting on Thursday, October 26, 11:30 a.m., at WUAR’s Education Center in Anderson. John Hunt, President of MarketNsight, will provide an analysis of today’s buyers and the local housing market, including his forecast for 2024. Register online.
See you Thursday.
Michael Dey, Director of Government Affairs