Housing Market Rebound Ahead?

Lawrence Yun's Optimistic Outlook: Why the Housing Market is Poised for a Strong Rebound

As we navigate the midpoint of 2025, the real estate landscape continues to evolve amid fluctuating mortgage rates and inventory levels. Drawing from the latest insights shared by Lawrence Yun, Chief Economist at the National Association of REALTORS® (NAR), during the July 2025 Real Estate Forecast Summit, there's reason for optimism. Yun's data-driven analysis indicates a market that's stabilizing and poised for growth, particularly as we look toward 2026. For buyers and sellers alike, this could mean exciting opportunities on the horizon. Let's break down the key takeaways and what they mean for you.

Steady Growth in Home Sales Ahead

Despite a sluggish start to the year—with existing-home sales dipping 2.7% in June 2025 due to persistent undersupply—Yun forecasts a modest 3% increase in existing-home sales for the full year of 2025, followed by a robust 14% surge in 2026. New-home sales are expected to rise by 5% in both 2025 and 2026, signaling builders' confidence in meeting demand.

What does this mean for clients? If you're a buyer who's been waiting on the sidelines, the anticipated uptick in sales could bring more options without the frenzy of past bidding wars. Sellers, meanwhile, can look forward to a more active market, especially as economic factors align to draw in qualified buyers.

Home Prices: Moderation with Upside Potential

Home prices have reached record highs, driven by years of undersupply where home construction has lagged behind population growth. Yun notes, "Multiple years of undersupply are driving the record-high home prices. Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market." However, his forecast indicates a slowdown in appreciation, with a 1% increase in median home prices for 2025, followed by an acceleration to 4% in 2026.

This moderation is good news for affordability. With wage growth at 3.7% outpacing inflation at 2.7%, more households are positioned to enter the market. Yun highlights that a drop in mortgage rates from 7% to 6% could qualify an additional 5.5 million households, potentially boosting home sales by 550,000 units over the next 12-18 months. Imagine the possibilities—this "magic bullet" of lower rates could make your dream home more attainable sooner than you think.

Mortgage Rates and Inventory: The Keys to Unlocking Opportunity

Mortgage rates remain a hot topic, with Yun projecting an average of 6.7% for 2025, easing to 6.0% in 2026. He emphasizes that 6% is the "magic" threshold where buyer activity could skyrocket. On inventory, while overall supply is increasing, many markets still face shortages due to homeowners "locked in" to low 3% rates from previous years. Some areas, like Miami, could take decades to normalize without rate relief.

Yun's take? "These are serious, potential buyers. It shows a desire to enter the market has turned..." Inventory is up in the summer months, offering buyers more room to negotiate—especially first-timers who have been sidelined.

Zooming In on Utah: Local Market Dynamics Aligning with National Trends

Here in Utah, we're seeing some of these national patterns play out in real time, providing a balanced perspective that supports Yun's optimistic forecast. Listing inventory has been climbing, with 18,983 homes for sale in June 2025—a 23.6% increase year over year. Utah is even among the states that have surpassed pre-pandemic inventory levels as of July 2025, giving buyers more choices and shifting leverage slightly in their favor. Days on market have also ticked up, reaching a median of 56 days in June, reflecting a more deliberate pace as high mortgage rates—still hovering around 6.7%—have tempered buyer urgency without halting activity entirely.

This local softening isn't a sign of weakness but rather a stabilization that echoes Yun's predictions. With a forecasted 3% rise in home sales for Utah in 2025, including an 8% jump in more affordable condos and townhomes, the market is poised for recovery as rates ease. For buyers, the increased inventory and longer market times mean better opportunities to negotiate and find the right fit, while sellers can still capitalize on steady demand once rates hit that "magic" 6% threshold. It's a transitional phase that's setting the stage for stronger growth ahead.

A Brighter Economic Backdrop

Supporting this positive shift are strong job gains: 1.6 million in 2025 and 2.0 million in 2026. Low mortgage delinquency and foreclosure rates underscore market stability, with 35.2 million homeowners owning free and clear. Yun's overarching message is one of resilience: "We’ve had the lowest home sales in 30 years for two consecutive years … [but] there’s a light at the end of the tunnel." The worst is over, and brighter days are coming.

For my clients, this means now is an ideal time to prepare. Whether you're buying, selling, or investing, let's connect to tailor these insights to your goals. Contact me today to discuss how we can capitalize on this evolving market—your next move could be the best one yet!