NAR sees pent-up housing demand if mortgage rates fall and confidence improves

The National Association of Realtors (NAR) reports that the U.S. housing market is experiencing significant pent-up demand that could be unleashed if mortgage rates decrease, inventory improves, and consumer confidence rebounds, according to NAR chief economist Lawrence Yun.

Yun contrasted current housing sales near 4 million with the 5.2 million homes sold in 2000, despite population growth from 281 million to 350 million and payroll jobs increasing from 132 million to 159 million since then. Housing wealth has also grown from $7 trillion to $35 trillion.

Inventory has risen as sales have slowed, with months' supply at its highest since 2015 and the median home taking 33 days to go from listing to contract in September, Yun said. He noted that homes are staying on the market longer and sellers need to be realistic about market conditions.

Consumer sentiment is a key factor affecting the market, with confidence levels currently about half of what they were in 2000 and lower than during the Great Recession, despite job growth. Boosting confidence could help change market dynamics.

NAR deputy chief economist Jessica Lautz highlighted that first-time buyers represent 22% of all buyers, near a series low, and the median age of first-time buyers remains at a record high of 40, indicating younger households are delaying homeownership even as they enter peak earning years.