ANAHEIM, CA—Elevated mortgage rates, high home prices and limited housing inventory are making the dream of homeownership difficult for Americans, according to NAR Chief Economist Lawrence Yun.

Yun analyzed the current state of the U.S. residential real estate market and shared his 2024 outlook yesterday (Nov. 14) during the Residential Economic Issues and Trends Forum at the 2023 NAR NXT, The Realtor Experience, in Anaheim, CA.

He explained that high mortgage rates and low inventory have dominated 2023, saying, “Twenty-year-high mortgage rates have held off home buyers. There’s also a lack of housing inventory to sell, which means fewer opportunities for sales in the marketplace.”

Yun said that home sales will likely decline by 18% this year, compounding a 17% reduction last year.

Driven by extraordinarily high interest rates, 30-year-fixed mortgage rates remained elevated in 2023, climbing to as much as 8%.

“These high interest rates have had a great impact on the U.S.’ overall economic performance,” Yun said.

Yun referenced the latest GDP figure, which grew by 4.9%, but warned, “Statistically, this is much better than the historical average, but if we look at this component, there are some worrying signs in the economy.” The first being that business spending is essentially flat. The second is that goods inventory is rising, meaning products are being produced but not getting sold.

“We cannot keep adding to the shelves,” said Yun. “Just like in housing, businesses have to borrow money, and business spending is down because it’s more expensive to borrow.”