house filled with 100s hanging from sale sign

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Where Are the Buyers?

They’re waiting until their earnings and home prices are in closer alignment.

July - August
2018

The economy is solidly advancing. The anticipated growth rate of 4 to 5 percent in the second quarter is remarkable. For the year, the GDP will exceed 3 percent for the first time since 2005. Employment, likewise, is strong: 5 million net new jobs over the past two years, pushing the unemployment rate down to 3.8 percent, the lowest rate in 50 years. Wages are up, too, by 2.8 percent over the last 12 months.

There is more good news. Despite recent volatility, the stock market has been close to an all-time high, helping push combined wealth in the U.S. across the $100 trillion mark for the first time. The median home price has risen 40 percent over the last five years and continues to climb.

And yet home sales are down 1 percent from this time last year, and homebuyer sentiment is tepid. The number of consumers strongly expressing “it is a good time to buy” fell to 38.5 percent in the first half of the year compared to 45 percent at a similar period last year.

What’s behind the mismatch? For many potential buyers, homes are just too expensive. That’s why more building is critical. Consider advocating for accelerated new construction in your community. Some goals to consider pursuing with local authorities: streamlining the housing permit process; reducing impact fees on new homes; reducing minimum lot sizes; expediting local environmental reviews; promoting the repurposing of outdated commercial buildings into residential units; amending rehabilitation codes, and encouraging use of prefabricated, modular housing, and accessory dwelling units.

At the federal level, the National Association of REALTORS® is pushing for expanded vocational training in construction fields, revised condominium defect laws, and increased community bank lending for lot development. The combined impact of these efforts could be tremendous. Not only would these steps relieve the housing shortage, they’d help keep economic growth humming at 4 percent or more. And that would be a win for everyone.

Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®

Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1.3 million REALTOR® members.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them the Blue Chip Council and the Wall Street Journal Forecasting Survey. He also participates in the Industrial Economists Discussion Group at the Joint Center for Housing Studies of Harvard University. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. Dr. Yun has appeared as a guest on CSPAN’s Washington Journal and is a regular guest columnist on the Forbes website and The Hill, an “inside the beltway” publication on public affairs.

Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.

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