Existing home sales continue to fall, with the annual rate reaching its lowest level since 1995.
Lawrence Yun, National Association of Realtors Chief Economist joins Yahoo Finance Live to weigh in on what could bolster the home buying market.
Yun argues the housing market needs more first-time homebuyers, specifically, younger homebuyers. “The age of the first time buyers, which recently has been in the mid-30s, we want to see that entry point… close to the age of 30,” he says.
According to Yun, the new home construction market will “squeak out a gain,” in 2023. Yun says that this should not be taken for granted because there is still an insufficient amount of inventory, “the builders need to quickly ramp up production. America has a housing shortage.”
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Eyek Ntekim
Video Transcript
BRAD SMITH: Big home sales energy this morning, Lawrence, as we think about as well the Redfin report that pending home sales rose 4% in December. That’s the biggest jump in over two years, they say, and really citing the average 30-year fixed mortgage rate falling to 6.82% in December from that 7.44% in November. That driving people back into the market here. Is there one specific cohort that you would say we need to see enter back into the home buying market in order for us to see a larger or continued shift?
LAWRENCE YUN: The latest data showed 29% of all buyers being first-time buyers. That is too low. We need to see that figure at 35%.
And furthermore, the age of the first time buyers, which recently has been in the mid 30s, we want to see that entry point, the age when people enter as a first time buyers, close to the more age of 30, which used to be the case. Because we want that home ownership opportunity, the American dream opportunity for more Americans starting from you know young adulthood, in their late 20s, early 30s. So if we see that, then we clearly know the path is going in the right direction.
BRAD SMITH: Lawrence, on the new home side though, and we’ve been talking about existing homes quite a bit, but new homes as well, are we still behind in the number of homes that need to be produced in order for there to be ample supply for potential new home buyers to get into?
LAWRENCE YUN: You know the new home construction market actually will squeak out. It looks like they’re going to squeak out again this past year because they can create inventory. But the amount of creation of inventory is still insufficient, especially in light of decade of underproduction.
So to compensate for decade of underproduction, the builders need to quickly ramp up production. America has a housing shortage. People, especially the renters, are burdened with high rent.
The potential first-time buyers, they are looking at record-high home prices. Only way to alleviate the price pressure is to have more supply. So everything to assure that we have more supply coming on to the market, maybe less regulation, maybe looking at the rezoning rules, so anything to provide more facilitation for construction that will be good for America and for economic activity.
