NAR Midyear Forecast: Existing-Home Sales Poised to Climb 3.5 Percent in 2017

Washington, D.C. – May 18, 2017 (nar.realtor) The multi-year stretch of robust job gains along with improving household confidence are expected to guide existing-home sales to a decade high in 2017, but supply and affordability headwinds and modest economic growth are holding back sales and threatening to keep the nation’s low homeownership rate subdued. That’s according to speakers at a residential real estate forum here at the 2017 REALTORS® Legislative Meetings & Trade Expo.

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Lawrence Yun, chief economist of the National Association of Realtors®, presented his 2017 midyear forecast and was joined onstage by Jonathan Spader, senior research associate at the Joint Center for Housing Studies at Harvard University, and Mark Calabria, chief economist and assistant to Vice President Mike Pence. Spader’s presentation addressed past and projected movements in the homeownership rate, and Calabria dove into why reversing weak productivity and the low labor force participation rate are necessary to boost the economy.

The first quarter was the best quarterly existing sales pace in exactly a decade (5.62 million), and Yun expects activity to stay on track and finish around 5.64 million – the best since 2006 (6.47 million) and 3.5 percent above 2016. With several metro areas seeing hefty price growth, the national median existing-home price is expected to rise around 5 percent this year.

“The housing market has exceeded expectations ever since the election, despite depressed inventory and higher mortgage rates,” said Yun. “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence are giving more households the assurance and ability to purchase a home.”

Although sales are currently running at a decade high, Yun believes the healthy labor market should be generating even more activity. However, listings in the lower- and mid-market price range are scant and selling fast, and homebuyers are discovering they can afford less of what’s on the market based on their income.

“We have been under the 50-year average of single-family housing starts for 10 years now,” said Yun. “Limited lots, labor shortages, tight construction lending and higher lumber costs are impeding the building industry’s ability to produce more single-family homes. There’s little doubt first-time buyer participation would improve and the homeownership rate would rise if there was simply more inventory.”

Housing construction has been uneven so far this year, but Yun does anticipate starts to jump 8.4 percent to 1.27 million. However, this is still under the 1.5 million new homes needed to make up for the insufficient building in recent years. New single-family home sales are likely to total 620,000 this year, up 8.4 percent from 2016.

Addressing the nation’s low homeownership rate, Spader said substantial uncertainty exists about its future direction. He cited foreclosure-related housing exits from older adults and delayed buying from younger households as the primary causes in the downward trend since the downturn. He said the good news is that while there was growth in homeowner households in 2016, an aging population, changes in family type and increasing diversity by race and ethnicity all pose as headwinds going forward. Spader’s 2025 projection puts the homeownership rate in a range of 61.0 – to – 65.1 percent.

“Stagnant household incomes, rising rental costs, student loan debt and limited supply have all contributed to slower purchasing activity,” said Spader. “When the homeownership rate stabilizes, there will be an increase in homeowner households. Young and minority households’ ability to reach the market will play a big role in how much the actual rate can rise in coming years.”

Calabria’s presentation focused on his thoughts of what can be done to jump-start economic growth. He attributed prolonged weak productivity and the low labor participation rate as the primary reasons why the current economic expansion is the slowest since World War II.

“A strong labor market will drive a strong housing market, but you can’t have a strong housing market without a strong economic foundation,” said Calabria. “The recovery has been uneven with roughly 70 counties making up roughly half of all job growth. The White House’s proposed plans to cut corporate and individual tax cuts will help large and small businesses grow, hire and ultimately contribute to more households buying homes as more money goes into their pockets.”

Although Yun said economic growth in the first quarter was “a huge disappointment” at 0.7 percent (first estimate), he anticipates that an increase in consumer spending and more homebuilding should provide enough fuel for gross domestic product to finish slightly higher, at 2.2 percent, than a year ago (1.6 percent).

Yun believes the rising interest rate environment is here to stay as the Federal Reserve slowly begins unwinding its balance sheet. He foresees two more short-term rate hikes by the end of this year and for mortgage rates to average around 4.30 percent before gradually climbing towards 5.0 percent by the end of 2018.

“There was a lot of uncertainty at the start of the year, but a very strong first quarter sets the stage for a modest sales increase compared to last year,” said Yun. “However, prices are still rising too fast in many areas and are outpacing incomes. That is why housing starts need to rise to alleviate supply shortages. There will be more sales if there’s a meaningful bump in new and existing inventory.”

Members of the media are invited to attend the upcoming Sustainable Homeownership Conference on June 9 at University of California’s Memorial Stadium in Berkeley. In celebration of Homeownership Month, the conference brings together experts to examine housing trends and real estate’s positive impacts. 2017 NAR President Bill Brown, NAR Chief Economist Dr. Lawrence Yun and Berkeley Hass Real Estate Group Chair Ken Rosen are among the prominent experts scheduled to speak. To register, visit www.nar.realtor.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE: Existing-Home Sales for April will be released May 24, and the Pending Home Sales Index for April will be released May 31; release times are 10:00 a.m. ET.

Media Contact:

Adam DeSanctis
(202) 383-1178
Email

Flood Insurance, Tax Reform Top Issues as Realtors® Head to Washington

Washington, D.C. – May 16, 2017 (nar.realtor) Nearly 9,000 Realtors® and industry guests are descending upon Washington this week to address regulators and members of Congress on key industry issues, including national flood insurance, tax reform and sustainable homeownership.

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Realtor® members will visit U.S. House and Senate offices to urge Congress to pass a multiyear reauthorization of the National Flood Insurance Program before it expires on September 30. Additionally, Realtors® are seeking to protect sustainable homeownership by advocating for responsible reform of the secondary mortgage market, prohibiting the use of mortgage guarantee fees for any purposes other than credit-risk management and improving consumer protections for energy efficiency improvement loans.

Realtors® will also be reminding legislators that while Realtors® support tax reform, it cannot happen by diminishing the real estate tax provisions that are an essential component of a vibrant housing market and key driver of the economy.

During the meeting, attendees will also be participating in a series of on-site visits with regulatory agency staff at the Federal Aviation Administration, Federal Emergency Management Agency, U.S. Department of Treasury and the U.S. Department of Veterans Affairs.

“With a new president and Congress in office, it’s vitally important for regulators and policymakers in Washington to hear from the nation’s Realtors® about issues affecting their businesses, communities and clients,” said National Association of Realtors® President William E. Brown, a Realtor® from Alamo, California and founder of Investment Properties, a division of his family real estate business. “Robust commercial markets and helping more Americans achieve the dream of homeownership are things we believe strongly in protecting, which is why we are here this week engaging with our senators and representatives and making our voices heard.”

This year’s meeting, which kicks off today and runs through Saturday, May 20 will also feature nearly 100 conference sessions on hot topics that range from policy to technology. Conference attendees will hear from industry experts and thought leaders, including:

  • Mark Calabria, chief economist to Vice President Mike Pence, who will discuss the market and potential administration changes and their effect on housing.
  • Dr. Ben Carson, secretary, U.S. Department of Housing and Urban Development, who will talk about access to mortgage credit and his priorities for the Federal Housing Administration.
  • John Worth, senior vice president for Research and Investor Outreach, National Association of Real Estate Investment Trusts, who will share the perspectives of publicly listed companies on current developments in commercial markets.
  • Roy Wright, deputy associate administrator for Insurance and Mitigation, Federal Emergency Management Administration, who will discuss the NFIP benefits provided to millions of home and business owners.
  • Lawrence Yun, NAR chief economist, who will share residential and commercial real estate market updates and forecasts.

Recognizing those who play a role in making the Realtors® Political Action Committee among the largest and most bipartisan contributor to candidates, 143 Realtors® will be inducted into the RPAC 2016 Hall of Fame, which recognizes members whose aggregate RPAC investments are at least $25,000. The 2016 class is the largest ever and includes a member who has invested $150,000, the highest in RPAC’s 48-year history. Hall of Fame inductees were recognized onstage during the meetings with a plaque and lapel pin and will have their name inscribed on the Hall of Fame placard on the rooftop of NAR’s D.C. headquarters. The list of 143 inductees is available at www.realtoractioncenter.com/rpachof.

The legislative meetings coincide with Realtors® Advocacy Month, designed to engage and educate Realtors® to vote, act and invest in advocacy issues at all levels of government. Throughout the month of May, state and local associations of Realtors® are sharing their candidate and issue campaign successes, holding voter registration drives or community outreach events, and educating members on issues important to the industry, markets and consumers.

The meeting trade expo will be open Wed., May 17 and Thur., May 18 from 10 a.m.-6 p.m. More than 100 industry-leading companies will demonstrate the latest real estate products and services.

To stay connected with the conference follow the Realtors® Legislative Live blog, live.blogs.realtor.org/, the Twitter hashtag #narlegislative, or find NAR at @nardotrealtor on Facebook and Twitter.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Sara Wiskerchen
(202) 383-1013
Email

Communication Is Key as Realtors, Lenders Adjust to New Disclosure Requirements

Washington, D.C. – May 12, 2015 (Realtor.org) Realtors® should prepare themselves now for the new disclosure requirements being implemented by the Consumer Financial Protection Bureau later this year, and communication between all parties in the real estate transaction is essential in ensuring a smooth transition, according to speakers at a regulatory issues forum here at the 2015 Realtors® Legislative Meetings & Trade Expo.

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CFPB Director Richard Cordray and industry experts discussed how mortgage lenders, Realtors® and consumers can best prepare for the CFPB’s Real Estate Settlement and Procedures Act and Truth in Lending Act, or RESPA-TILA, integrated disclosure requirements going into effect on August 1.

NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., kicked off the forum addressing a packed room of Realtors® about the importance of understanding and following the regulatory change. “The regulatory issues we’re facing are extremely complicated, and because they play such a big role in the real estate transaction, it’s important that we embrace them and move forward,” he said.

cordray-legislative-meetings-2015-05-12-300Cordray said the CFPB’s new mortgage rules are smart for the industry and are designed to educate and empower consumers to “know before they owe.” He stressed the importance of preserving reliability in the mortgage market and ensuring that consumers have the knowledge upfront they need when buying a home, which he labeled as likely one of the biggest financial decisions they’ll make in their lives.

“Consumers taking out a loan to buy a home should be ensured they aren’t set up to fail,” he said. According to Cordray, the new forms – the Loan Estimate and Closing Disclosure – improve consumer understanding of the mortgage process sooner, aid in comparison shopping and help to prevent unexpected issues at the time of closing.

Mindful of the industry’s concerns about delivering both forms within three business days, Cordray said the CFPB listened, and has limited the possibility of closing delays to three instances: changes in the annual percentage rate of a mortgage loan of more than one-eighth of a percent for fixed-rate loans or more than one-fourth of a percent for variable-rate loans, the addition of a prepayment penalty and a change in the mortgage product, such as moving from a fixed-rate mortgage to an adjustable-rate mortgage.Cordray said the CFPB listened, and has limited the possibility of closing delays to three instances: changes in the annual percentage rate of a mortgage loan of more than one-eighth of a percent for fixed-rate loans or more than one-fourth of a percent for variable-rate loans, the addition of a prepayment penalty and a change in the mortgage product, such as moving from a fixed-rate mortgage to an adjustable-rate mortgage.

“The timing of the closing date is not going to change based on the final walk-through,” he stressed.

Cordray concluded his remarks by acknowledging that the new forms represent a major undertaking for lenders, settlement agencies, vendors and Realtors®. “We continue to receive input and are listening close to any additional concerns out there as we move closer to the implementation date,” he said.

Also sharing their insights on the rule changes were Penny Reed, vice president of settlement services at Wells Fargo; Reneé Gonzales, executive vice president of Core Services, president of Long Title Agency and managing director for Long Mortgage Company; and Phillip Shulman, a partner at K&L Gates LLP.

Given the complexity and importance of continued communication between lenders and real estate agents during a transaction, the biggest concern among the speakers was making sure everyone – including the buyer and seller – are on the same page throughout the transaction to avoid closing delays.

Sharing her insights from the lender perspective, Reed explained that the industry is as prepared as it can be for August 1 and said the top priority is abiding by the new rules while making sure it’s done with minimal impact to consumers.

“It’s our duty as lenders and Realtors® to work together on behalf of our clients and manage their expectations as they move forward with buying or selling a home,” she said.

On Thursday, Polychron will testify before the U.S. House Financial Services Committee about the rule changes. NAR is generally supportive of CFPB’s move to harmonization, as long as it benefits consumers and makes the real estate transaction smoother.

On Friday, meeting attendees can learn more about RESPA-TILA at the “RESPA 2015: Big Changes Ahead” forum at 10:30 a.m. EDT. Shulman will go into more detail about the changes to the closing process, the CFPB’s increased enforcement on anti-kickback provisions and the greater scrutiny of marketing agreements under RESPA.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Adam Desanctis
(202) 383-1178
Email

Can’t Attend The REALTORS Legislative Meetings and Trade Expo? Watch The NAR 360 Highlights Here!

In the following video, from the NAR Meetings YouTube channel, we hear a moving tribute to REALTOR® Beverly Carter of Arkansas, information about the new REALTOR.com advertising featuring actress Elizabeth Banks and an interview with HUD Secretary, Julian Castro.

Realtors Head to Washington to Urge Action on Industry, Consumer Issues

Washington, D.C. – May 12, 2015 (Realtor.com) Realtor® leaders from across the country will converge on the nation’s capital this week to advance key real estate issues with regulators and members of Congress during the Realtor® Legislative Meetings & Trade Expo, here through May 16.

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Nearly 8,500 Realtors® and guests will meet with legislators, regulatory officials and top industry executives to ensure qualified buyers and investors have access to safe and affordable mortgage financing and protect and advance the operations of Realtors®’ businesses and real estate-related tax policies.

Chris Polychron

Chris Polychron

“To ensure all Americans continue to have affordable access to commercial and residential property ownership and investment, it’s vital for Realtors® to continue the dialogue with regulators and elected officials,” said National Association of Realtors® President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “With the current policy debates underway in Washington, this is a critical time for Realtors® to come together and be heard on the issues that are important to the industry, communities and the clients that Realtors® serve.”

While on Capitol Hill, Realtors® will urge their elected officials to preserve current real estate-related tax policies and extend the Mortgage Forgiveness Tax Relief Act, which expired at the end of 2014 and prevents distressed homeowners from facing excessive income tax bills on forgiven home loan debt. Realtors® will also be actively engaging with lawmakers on protecting commercial real estate related tax provisions, such as retaining like-kind exchange provisions and making permanent the 15-year depreciation period for leasehold improvements.

In addition, Realtors® are urging members of Congress to enact legislation reforming patent demand letters, setting nationwide data security standards, and ending discrimination against affiliated lenders by passing the Mortgage Choice Act.

Realtors® will attend sessions with government officials and industry experts, including Secretary of Housing and Urban Development Julián Castro, who will provide a housing industry outlook, and Consumer Financial Protection Bureau Director Richard Cordray, who will speak about changes to loan closing procedures and documents.

On Thursday, May 14, Polychron will offer testimony before the U.S. House Financial Services Subcommittee on Housing and Insurance about the Consumer Financial Protection Bureau’s changes that the Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosure requirements will bring on August 1 to the mortgage closing process.

“NAR is generally supportive of the move to harmonization, as long as it benefits consumers and makes the real estate transaction smoother. However, we see potential for significant bumps in the road – bumps that could cost families time and money and cause serious frustration,” said Polychron. “As the leading advocate for real estate issues, it’s our job to address this pressing issue as well as many others with Congress, regulators and industry official this week as we continue our fight to protect consumers in the real estate transaction, promote affordable financing, and address the issues affecting the real estate business and industry.”

Other speakers during the week include, political strategists Donna Brazile and Ed Gillespie, who shared their perceptions with Realtors® of how social media and the 24-hour news cycle impact congressional priorities and contribute to today’s political gridlock; Move, Inc. CEO Ryan O’Hara, who will talk about the year ahead for realtor.com®, NAR’s official listing site; and senior staff from the Federal Aviation Administration’s Unmanned Aircraft Systems Integration Office about drone technology. NAR Chief Economist Lawrence Yun will also share residential and commercial real estate market and economic outlooks.

Attendees will also be conducting in-person meetings with Obama administration officials and senior staff at the Federal Housing Finance Agency, Department of Veterans Affairs and Department of Agriculture’s Rural Housing Service.

For the latest news from the conference, visit NAR’s Realtors® Legislative Live blog, live.blogs.realtor.org/, and Twitter, twitter.com/narlegislative.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Sara Wiskerchen
(202) 383-1013
Email