The market assessment of current conditions and expectations for the future have been falling from the summer of last year. Generally, the two metrics move roughly together, albeit with the outlook views usually getting a tad higher mark.
The two data interestingly began to diverge with outlook brightening from November while current conditions remained stagnant. Will REALTORS® be sorely disappointed in their outlook or are they seeing subtle intangible trends not picked in the market place? Knowing that sellers who already committed to list their home and buy a new one but will only do so once the snow clears is an example of special info that only the REALTORS® would possess without any hard data in the MLS to show for it.
The job creation of over 2 million in the past year and nearly 8 million in the past 5 years suggests that there is an underlying logic to the potential demand for home buying. Falling affordability (from higher prices and higher mortgage rates) has been a damper, however.
REALTORS®’s assessment of the housing market outlook differs sharply with the general public’s view of economic conditions. Consumers have been giving a better score on current job/economic conditions with each passing month. However, views of future economic conditions have remained stuck with no change. A worried consumer, even if the current conditions are improving, is less likely to spend on a major expenditure. It’s worth a careful watch as to how the future develops given the two divergent views about the future.
NAR’s forecast is for home sales to be lower by 5 percent in the first half of this year versus the same period a year ago. But the sales are projected to be 2 to 3 percent higher in the second half of the year. Home prices, because of the inventory shortage, will keep marching higher to 5 to 6 percent for the year.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.