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National Association of Realtors (NAR) Chief Economist Lawrence Yun is projecting an 11% higher level of new home sales in 2025 and 8% higher level in 2026, with the median home price forecast to be 2% higher in both 2025 and 2026.

“Maybe the worst is coming to an end,” said Yun regarding the mostly sluggish state of home sales. “Directionally, I think there’s going to be roughly a 10% boost of existing-home sales in 2025 and 2026.”

However, Yun warned that the ongoing federal deficit challenge will impact the housing market for the next two years.

“Today, we have a massive budget deficit at a time when we are not in an economic recession,” said Yun. “Clearly, President-Elect Trump will not stop tax cuts – he will extend or expand them. There will be less mortgage money available because the government is borrowing so much money. However, if the Trump administration can lay out a credible plan to reduce the budget deficit, then mortgage rates can move downward.”

Yun added there was another way to address the budget deficit is to bring down the price of housing.

“We have to have more supply,” he said. “Per our advocacy efforts, we’re trying everything we can to boost supply.”

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Yun predicted mortgage rates will be “bouncing around 5.5%-6.5%,” though he doubted rates would drop back to the 4% seen in the first Trump administration. Yun expected the Federal Reserve to enact six-to-eight more interest rate cuts in the coming months, with four different rounds during 2025, but he also recommended that the central bank not rush into additional rate cuts.

“My advice to Jerome Powell: Do it in January, rather than December,” he said.

Photo courtesy of NAR

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