Pent up housing demand could enter market if affordability and supply improve

Sidelined home buyers could flood the housing market if housing supply, affordability, and consumer confidence improve. RISMedia reported that National Association of Realtors Chief Economist Lawrence Yun presented this market outlook on Friday at the Residential Economic Issues and Trends Forum at NAR NXT in New Orleans. [1]

According to RISMedia, Yun compared the current economy to the year 2000. He noted that the United States population grew from 281 million to 350 million over that period, while payroll jobs increased from 132 million to 159 million. Yun stated that incomes are rising, which could release significant potential housing demand if mortgage rates decline. [1]

As FTMQ Real Estate reported earlier, existing home sales have been tracking near four million units annually despite rising population growth and housing wealth. Total United States housing wealth grew from $7 trillion to $35 trillion since 2000. Current market data shows that housing inventory reached its highest level since 2015, while first time home buyers account for 22 percent of purchases. [5]

The potential demand comes during an ongoing United States affordability crisis. The economic environment has been characterized by stagnant wage growth, elevated inflation, rising household bills, and elevated interest rates since inflation spiked in 2021. RISMedia noted that it remains unclear how likely the necessary improvements in supply and rates are in the near term. [1][4]