Pending home sales continued to fall in October as higher mortgage rates shook buyer confidence. Read more from NAR’s latest home sales report.

Pending home sales fell for the fifth consecutive month in October as rising mortgage rates brought many housing markets to a halt. But now that rates show signs of stabilizing, economists say more home buyers—particularly first-timers—may gradually return to the market.

Still, contract signings dropped 4.6% in October and were down 37% from the previous year, the National Association of REALTORS® reported Wednesday. It was a difficult month for the market as buyers faced 20-year-high mortgage rates, with the 30-year fixed-rate loan eclipsing an average of 7%. Last week, however, the 30-year loan averaged 6.58%, marking the second consecutive week of declines, according to Freddie Mac.

“The West region, in particular, suffered from the combination of high interest rates and expensive home prices,” says NAR Chief Economist Lawrence Yun. “Only the Midwest squeaked out a gain. The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.” 

Housing economists are looking ahead to what the next year could hold for the real estate market. Housing activity is still expected to be robust, but home prices are expected to slow their record pace of growth, according to realtor.com®’s Housing Forecast 2023(link is external). In fact, realtor.com® predicts, annual price growth could moderate to the single digits—likely around 5.4%—for the first time since 2020.

Realtor.com® also forecasts a 22.8% increase in the supply of existing homes on the market in 2023, which would give home buyers more choices. Home sales, however, are expected to fall 14.1%, reaching their lowest level since 2012, according to realtor.com®. Rents, meanwhile, are expected to surge to new highs in 2023, adding more budget pressures on renter households who aspire to homeownership.

“Compared to the wild ride of the past two years, 2023 will be a slower-paced housing market, which means drastic shifts like price declines may not happen as quickly as some have anticipated,” says realtor.com® Chief Economist Danielle Hale. “It will be a challenging year for both buyers and sellers—but an important one in setting the stage for home sales to return to a sustainable pace over the next two to three years.” NAR will host a virtual Real Estate Forecast Summit on Dec. 13 at noon ET, where Yun and other leading economists will provide a year-end review of the 2022 real estate market and a look ahead at the economy for 2023.

©National Association of REALTORS®
Reprinted with permission

The omnibus bill cleared Congress on Friday and now goes to President Joe Biden’s desk for his signature.

Congress gave final approval Friday to a bipartisan bill to fund the government through Sept. 30, 2023, clearing the last major piece of legislation for the year. The bill now goes to President Joe Biden for his signature. Included in the bill are an extension of the National Flood Insurance Program (NFIP) through Sept. 30 and a host of other housing programs supported by the National Association of REALTORS®. Here’s a detailed list of NAR priorities included in the spending package:

1. Anti-money laundering: The bill provides funding for developing a beneficial ownership database, which includes information on real estate ownership to support anti-money laundering efforts. 
2. Broadband: $364 million is appropriated to the USDA’s Rural Development Broadband ReConnect Program(link is external) to fulfill its mission of providing loans and grants to fund construction, improvement or acquisition of facilities and equipment to provide broadband service in eligible rural areas.
3. Community development funding: The bill allocates nearly $6.4 billion to the Community Development Block Grant(link is external) (CDBG) program and other local economic development projects to benefit low- and moderate-income neighborhoods and people. This is a $1.6 billion increase in CDBG funding, including $85 million in grants to jurisdictions for the identification and removal of barriers to affordable housing production and preservation. The bill also allocates $324 million to the Treasury Department’s Community Development Financial Institutions Fund(link is external), which promotes economic and community development in low-income communities, including investments in low-income housing. 
4. COVID-19 assistance programs: There is increased funding in the bill for various programs under the pandemic-era CARES Act and American Rescue Plan, including housing and rental assistance. 
5. Disaster assistance: $27 billion is appropriated for emergency funding to help communities recover from recent natural disasters, rebuild infrastructure and prepare for future events. 
6. Elderly housing assistance: $1.4 billion is appropriated for the Housing for the Elderly and Housing for Persons with Disabilities programs under HUD.
7. Emergency disaster assistance: $38 billion is appropriated for emergency funding to help Americans impacted by recent disasters in the West and Southeast, including tornadoes, hurricanes, flooding and wildfires, as well as funding for FEMA’s Disaster Relief Fund.
8. Energy assistance: $5 billion is appropriated for the Low Income Home Energy Assistance Program(link is external) (LIHEAP), which helps low-income families pay their energy costs, including home energy bills, weatherization and certain energy-related home repairs.
9. Federal Housing Administration: The bill sets a limit of up to $400 billion in FHA commitments to guarantee single-family loans and provides $150 million for administrative costs, available through Sept. 30, 2024. 
10. Flood insurance: The bill extends the National Flood Insurance Program (NFIP) through the end of 2023. The program’s current authorization would have expired Friday. The bill also increases flood map funding from $275 million to $313 million. 
11. Ginnie Mae: The bill provides up to $900 billion for new loan guarantee commitments and provides $40.4 million for salaries and expenses for the Government National Mortgage Association.
12. HOME Investment Partnerships Program: $1.5 billion is provided for HUD’s HOME Investments Partnerships Program(link is external), which provides grants to states and localities to fund housing-related activities, including building, buying and rehabilitating affordable housing units for rent or purchase, as well as rental assistance. This money is expected to lead to the construction of nearly 10,000 new units for the rental and sale markets. 
13. Homelessness assistance: $3.6 billion for homeless assistance grants, enough to provide funding to assist more than 1 million people experiencing homelessness. This provision includes funding to expand assistance to special populations, including survivors of domestic violence, homeless youth and new permanent supportive housing for people experiencing homelessness.
14. Housing vouchers: The bill provides $130 million in new incremental funding for new Section 8 Housing Choice Vouchers, enough to support an additional 11,700 low-income households.
15. Infrastructure: The bill includes $62.9 billion for the Federal Highway Administration, which includes funding for federal highway programs from the 2021 Bipartisan Infrastructure Framework and money to address structurally deficient bridges. 
16. Manufactured housing: $225 million is provided for the preservation and revitalization of manufactured housing units and communities. 
17. Native community housing: Over $1 billion is appropriated for Native communities to purchase, construct or rehabilitate housing and related infrastructure to address production demand and the need for higher-quality housing stock. 
18. Retirement savings: The bill updates rules relating to employer 401(k) and 403(b) plans, requiring them to automatically enroll all new, eligible employees. 
19. Rural housing: $2 billion is appropriated for the USDA’s Rural Housing Service, an increase of $183 million over fiscal 2022. Within that increase is $40 million in rental assistance funds. 
20. Small business programs: More than $1.2 billion is appropriated for the Small Business Administration (SBA), including funds for SBA disaster loans, entrepreneurial development grants and small business development centers. 
21. Veteran housing: $2.7 billion is included for critical services and housing assistance for veterans. 

©National Association of REALTORS®
Reprinted with permission

As the economy improves, mortgage rates could dip as low as the 4% range, bringing buyers back to the market.

The inflation rate has been calming in recent months, contributing to falling mortgage rates through the holidays. Consumer prices are still running well above the typical 2% inflation rate, but November’s level of 7.1% was the lowest in 2022. Decelerating inflation is the key reason for the forecast of a 5.5% mortgage rate by the second half of 2023. Should the deceleration speed up faster than expected, the possibility of mortgage rates in the 4% range exists—which would bring buyers back to the market.

A significant potential contributor to the continuing decline in inflation is the rent people pay and the equivalency in rent owners would have paid. These measures are still on accelerating paths, with annual gains of 7.9% and 7.1%, respectively—their highest rise since the early 1980s. These huge gains are a result of the housing shortage and historically low rental vacancy rates. But lagging data shows the housing shortage is not as acute as previously thought. The rental vacancy rate was 6% in the third quarter of 2022, up from 5.8% a year earlier, and overall sale inventory is up 2.7% in December. Data on new lease rates from apartment property managers show a marked slowdown in gains.

Moreover, multifamily housing starts—which are primarily apartments—hit 550,000 units in 2022, the highest in nearly 40 years. Apartment vacancy rates will undoubtedly rise further. Rent growth will surely slow. Overall, consumer prices will calm down even further.

In addition, NAR has advocated for converting vacant commercial space (empty shopping malls or office buildings, for example) into residential units through funding and/or tax credit incentives. Financial incentives to rehab dilapidated, abandoned homes in some major cities will also help bring about more housing supply and greater neighborhood safety.

As to the economy, there could be a recession—or maybe not. GDP is sliding along the near-zero growth line, but strong job creation is a bright spot. Despite layoffs in some industries, overall job openings still exceed the number of unemployed by a 7-to-1 ratio. Net job creation will be around 1 million to 2 million this year. The people who take those jobs are future homeowners.

First-Time Buyer Share Still Low

Only 28% of home sales in November were by first-time buyers. That’s unchanged from October but up from 26% in November 2021. NAR’s 2022 Profile of Home Buyers and Sellers, released in November, found that the annual share of first-time buyers was the lowest since NAR began tracking the data.

©National Association of REALTORS®
Reprinted with permission

The Fed today would do well to consider the wisdom of Wayne Gretzky.

Mortgage rates fell on the day Silicon Valley Bank went bankrupt. In times of panic, financial market investors seek out the safest asset. Nothing is more secure than U.S. government bonds; they will be paid. There are, however, interest rate risks that all banks should properly manage or suffer the fate of SVB.

Government-guaranteed assets are next, so the mortgage investors of VA, FHA and most conforming mortgages can be assured they will get their money back. The average 30-year rate, therefore, fell from 7% to 6.5% in the course of two days. On a typical-size mortgage, the monthly payment fell by roughly $100.

More declines could happen. Stubbornly high consumer price inflation is decelerating, if slowly. It was running at 9% in mid-2022 before showing some improvement to 6% in February’s data. It needs to get to 2% before the Fed can declare victory, which is still two years away, but getting inflation to around 3% to 4% looks likely by year’s end. Despite the frustration of high egg prices, it’s housing costs that matter: Eggs are weighted at 0.2% of a typical household budget, while shelter costs represent 34.4%. And while rental costs are still accelerating at a rate of 8.8% annually, various private sector apartment data show actual rent declines. Also, construction of apartment units is at a 40-year high. More vacant units will soon appear, decelerating rents, possibly sharply.

Given rent projections and the lagging impact of Fed actions, the Fed needs to follow the maxim of hockey great Wayne Gretzky: Go where the puck will be and not where it is. The Fed should stop raising interest rates.

One significant risk remains. Are U.S. bonds the safest asset? The national debt level is making a hockey stick–shaped upturn to $30 trillion. A default is out of the question. But higher borrowing costs for all, including the government, could occur if Washington cannot get its act together.

Halting First Steps

First-time buyers made up just 27% of home sales in February 2023, down from 31% in January 2023 and 29% in February 2022. The first-timer share of the market was the lowest in 2022 since the National Association of REALTORS® began tracking the data.

©National Association of REALTORS®
Reprinted with permission

Here’s how you can help spread the word about the benefits of owning a home and support advocacy efforts to expand housing access.

Homeownership is a financial windfall for most households, with homeowner wealth soaring 40 times higher than renters. Over the last decade, most owners have earned more than $100,000 in equity, according to research from the National Association of REALTORS®. Homeownership has long been a primary avenue for building generational wealth and is a crucial component to closing the racial wealth gap in America.

As June marks National Homeownership Month, real estate professionals, brokerages, REALTOR® associations and lawmakers are promoting the benefits of homeownership while also spotlighting the work that still needs to be done. To help in this endeavor, NAR has launched a Homeownership Month toolkit. “Homeownership is the centerpiece of the American Dream and the best way to build financial security,” says NAR President Kenny Parcell. “REALTORS® strive to ensure all Americans have the opportunity to achieve homeownership, but prospective buyers face more barriers now than ever before. We continue to work with policymakers and industry partners to bring relief for buyers and put homeownership in reach for more people.”

President Joe Biden issued a proclamation(link is external) saying the month of June is a time to recognize the benefits of owning a home, such as building roots in a community, gaining equity and passing down generational wealth. The Department of Housing and Urban Development has launched a campaign, “Make Home the Goal(link is external),” to commemorate the month. The department will hold a free event this Saturday on the National Mall in Washington, D.C., to provide information to aspiring home buyers about housing counseling, financial education, down payment assistance and FHA mortgages. “I want everyone in this country who desires to own a home of their own to have access to the resources and tools they need,” HUD Secretary Marcia Fudge said in a statement.

Despite recent economic turbulence, Americans still have a strong desire to own a home. Fifty-eight percent of people who have never owned before say they are likely to purchase in the next 12 months, according to a new Chase survey of about 2,000 respondents. Seventy percent still see homeownership as an important step to building wealth, the survey shows.

What You Can Do

Here are some ways real estate pros can commemorate National Homeownership Month.

1. Spread the message. NAR’s toolkit offers graphics you can download and use on social media or as email headers to show your support. Use the free Photofy app(link is external) to personalize your graphics.

2. Advocate for homeownership. You can take part in a number of NAR advocacy efforts to support homeownership, whether it’s about financing, affordable housing or fair housing. For example, in a recent column(link is external) for The American Genius, NAR CEO Bob Goldberg shared how Atlanta REALTORS® Immediate Past President Karen Hatcher advocates for fair and affordable housing opportunities in her community. Last year, she was appointed as cochair of the Homeownership Working Group for HouseATL, which is the first local pilot program of the nationwide “3 by 30(link is external)” initiative to cultivate 3 million new Black homeowners by 2030. NAR serves as a founding member of the initiative, which was launched by the Black Homeownership Collaborative. Real estate professionals also are approaching city or state leaders to advocate for issues like zoning changes, affordable housing development and down payment assistance to enable more people to become homeowners.

3. Spark conversations. NAR’s research team releases studies throughout the year that collects homeownership data and addresses homeownership gaps and where progress can be made. Real estate pros can use the studies to raise conversations about homeownership. Here are just a few NAR has released over the past year:

• Wealth Gains by Income and Racial/Ethinc Group looks at how homeownership can be a catalyst for building wealth for low- and middle-income households and people of color.
• 2022 Obstacles to Home Buying details the most common obstacles in the buying process, broken down by race/ethnicity.
• Congressional District and State Reports provide data on housing in state and congressional districts.
• NAR also offers podcasts with conversations that address homeownership barriers. Listen to an episode of Drive With NAR: The REALTOR® to REALTOR® Series focused on how to harness your role in solving the inventory crisis.

How NAR Is Addressing Homeownership

NAR works closely with federal and state leaders, as well as industry partners, to address some of the main barriers to homeownership, such as housing supply and affordability. The association points to several advocacy successes this year, such as HUD’s February announcement to reduce mortgage insurance premiums and the Federal Housing Finance Agency’s recent decision to rescind a proposed mortgage fee on borrowers with debt-to-income ratios greater than 40% (which was slated to take effect Aug. 1). Both issues were viewed as hurdles to home affordability.

But NAR leaders say more needs to be done. In May, thousands of REALTORS® gathered in Washington, D.C., to share with Capitol Hill policymakers their legislative priorities to improve homeownership access, including:

• Increasing the maximum amount of capital gains a homeowner can exclude on the sale of a principal residence (and annually adjusting it for inflation) as a way to incentivize sellers and boost inventory.
• Attracting private investors to build and rehabilitate homes with tax credits.
• Incentivizing the conversion of unused commercial buildings to residential and mixed-use properties.
• Creating incentives for housing providers to participate in HUD’s Housing Choice Voucher program, as well as reauthorizing and increasing funding for HUD’s fair housing enforcement programs.

©National Association of REALTORS®
Reprinted with permission

Here’s how you can help spread the word about the benefits of owning a home and support advocacy efforts to expand housing access.

Homeownership is a financial windfall for most households, with homeowner wealth soaring 40 times higher than renters. Over the last decade, most owners have earned more than $100,000 in equity, according to research from the National Association of REALTORS®. Homeownership has long been a primary avenue for building generational wealth and is a crucial component to closing the racial wealth gap in America.

As June marks National Homeownership Month, real estate professionals, brokerages, REALTOR® associations and lawmakers are promoting the benefits of homeownership while also spotlighting the work that still needs to be done. To help in this endeavor, NAR has launched a Homeownership Month toolkit. “Homeownership is the centerpiece of the American Dream and the best way to build financial security,” says NAR President Kenny Parcell. “REALTORS® strive to ensure all Americans have the opportunity to achieve homeownership, but prospective buyers face more barriers now than ever before. We continue to work with policymakers and industry partners to bring relief for buyers and put homeownership in reach for more people.”

President Joe Biden issued a proclamation(link is external) saying the month of June is a time to recognize the benefits of owning a home, such as building roots in a community, gaining equity and passing down generational wealth. The Department of Housing and Urban Development has launched a campaign, “Make Home the Goal(link is external),” to commemorate the month. The department will hold a free event this Saturday on the National Mall in Washington, D.C., to provide information to aspiring home buyers about housing counseling, financial education, down payment assistance and FHA mortgages. “I want everyone in this country who desires to own a home of their own to have access to the resources and tools they need,” HUD Secretary Marcia Fudge said in a statement.

Despite recent economic turbulence, Americans still have a strong desire to own a home. Fifty-eight percent of people who have never owned before say they are likely to purchase in the next 12 months, according to a new Chase survey of about 2,000 respondents. Seventy percent still see homeownership as an important step to building wealth, the survey shows.

What You Can Do

Here are some ways real estate pros can commemorate National Homeownership Month.

1. Spread the message. NAR’s toolkit offers graphics you can download and use on social media or as email headers to show your support. Use the free Photofy app(link is external) to personalize your graphics.

2. Advocate for homeownership. You can take part in a number of NAR advocacy efforts to support homeownership, whether it’s about financing, affordable housing or fair housing. For example, in a recent column(link is external) for The American Genius, NAR CEO Bob Goldberg shared how Atlanta REALTORS® Immediate Past President Karen Hatcher advocates for fair and affordable housing opportunities in her community. Last year, she was appointed as cochair of the Homeownership Working Group for HouseATL, which is the first local pilot program of the nationwide “3 by 30(link is external)” initiative to cultivate 3 million new Black homeowners by 2030. NAR serves as a founding member of the initiative, which was launched by the Black Homeownership Collaborative. Real estate professionals also are approaching city or state leaders to advocate for issues like zoning changes, affordable housing development and down payment assistance to enable more people to become homeowners.

3. Spark conversations. NAR’s research team releases studies throughout the year that collects homeownership data and addresses homeownership gaps and where progress can be made. Real estate pros can use the studies to raise conversations about homeownership. Here are just a few NAR has released over the past year:

• Wealth Gains by Income and Racial/Ethinc Group looks at how homeownership can be a catalyst for building wealth for low- and middle-income households and people of color.
• 2022 Obstacles to Home Buying details the most common obstacles in the buying process, broken down by race/ethnicity.
• Congressional District and State Reports provide data on housing in state and congressional districts.
• NAR also offers podcasts with conversations that address homeownership barriers. Listen to an episode of Drive With NAR: The REALTOR® to REALTOR® Series focused on how to harness your role in solving the inventory crisis.

How NAR Is Addressing Homeownership

NAR works closely with federal and state leaders, as well as industry partners, to address some of the main barriers to homeownership, such as housing supply and affordability. The association points to several advocacy successes this year, such as HUD’s February announcement to reduce mortgage insurance premiums and the Federal Housing Finance Agency’s recent decision to rescind a proposed mortgage fee on borrowers with debt-to-income ratios greater than 40% (which was slated to take effect Aug. 1). Both issues were viewed as hurdles to home affordability.

But NAR leaders say more needs to be done. In May, thousands of REALTORS® gathered in Washington, D.C., to share with Capitol Hill policymakers their legislative priorities to improve homeownership access, including:

• Increasing the maximum amount of capital gains a homeowner can exclude on the sale of a principal residence (and annually adjusting it for inflation) as a way to incentivize sellers and boost inventory.
• Attracting private investors to build and rehabilitate homes with tax credits.
• Incentivizing the conversion of unused commercial buildings to residential and mixed-use properties.
• Creating incentives for housing providers to participate in HUD’s Housing Choice Voucher program, as well as reauthorizing and increasing funding for HUD’s fair housing enforcement programs.

©National Association of REALTORS®
Reprinted with permission