Yesterday, I attended the Economic Forecast session during the NAR Mid-Year Meetings in Washington D.C.,
where National Association of REALTORS® Chief Economist Lawrence Yun gave a sobering yet hopeful outlook
for the housing market — and homeowners, sellers, and agents in the St. Louis area should take note.
Yun, recently ranked one of the nation’s top economic forecasters by The Wall Street Journal,
admitted the recovery he had predicted hasn’t yet materialized. “I thought at this conference I would share some
good news with you. Home sales are rising. Momentum is building. But we are not seeing that,” he told the crowd.
His presentation focused on key economic dynamics affecting housing, particularly the unusual gap between mortgage
rates and 10-year Treasury yields. Under typical conditions, mortgage rates hover 150-200 basis points above Treasuries.
Today, that spread has ballooned to over 300 points. “We should be seeing mortgage rates around 6%, not 7%,” Yun explained. He attributed the mismatch to uncertainty around reforms to Fannie Mae and Freddie Mac, debt rating downgrades, and volatile economic policy.
Yun emphasized the pressure this places on new buyers. “Your past clients are happy. Their monthly payment is fixed. But for new buyers, their monthly obligations have skyrocketed,” he said. He believes lower mortgage rates — combined with a stabilizing bond market — could be the “magic bullet” needed to jumpstart the market.
Still, there are positive indicators. Yun pointed to a 20% year-over-year increase in mortgage purchase applications as a sign of pent-up demand. “Just imagine if your home sales were 20% higher. The demand is there. It’s just not being realized yet,” he noted.
St. Louis agents should also pay attention to Yun’s comments on pricing strategy. Even though national home prices are at record highs, price cuts are deeper today than pre-COVID levels for the same days on market. This underscores the need for accurate pricing and strong listing preparation.
Danielle Hale, Chief Economist at Realtor.com, reinforced Yun’s concerns about affordability. She revealed that buying a home still costs nearly twice as much as it did five years ago and noted that 3.8 million homes are needed nationwide to meet demand.
For agents and sellers in the St. Louis metro area, this means opportunity. The Midwest is gaining traction for price growth thanks to its relative affordability. If mortgage rates dip — as many economists anticipate — we may see momentum build sharply heading into the second half of 2025.
As Yun concluded: “Homeownership is a pathway to wealth. Renters simply don’t build that wealth.” The aspiration remains strong. Now it’s up to market forces — and smart local strategy — to turn that aspiration into action.
For those ready to act or plan their next move, there’s reason to be optimistic… just keep an eye on rates.
The agents at MORE, REALTORS® are professionals that stay on top of the market and other factors that affect home buyers and sellers and help guide clients through the process to achieve their desired result.
