NAR Economist Says Multiple Rate Cuts are on the Horizon

WHITE PLAINS—National Association of Realtors Chief Economist Lawrence Yun gave a detailed presentation on the current economic conditions and the state of the housing market at the Hudson Gateway Association of Realtors “Impact: The Member Experience” event. He noted that while the home sales downturn continues, there is hope on the horizon in the form of multiple rate cuts by the Federal Reserve in 2025 and 2026.

Yun noted that the latest inflation rate of 2.9% was higher than the Federal Reserve’s target rate of 2%, but a weakening job market prompted the Fed to cut rates by a quarter percentage point at its September meeting.

The NAR Chief Economist said Wall Street has raised expectations and now forecasts a total of three rate cuts this year. In fact, JP Morgan recently predicted two more rate cuts at the Fed’s meetings in October and December and another rate cut in early 2026.

“In my view, I think there will be probably around six rounds of rate cuts all the way through next year,” Yun told the HGAR gathering. He expects three rate cuts in 2025, followed by another three rate cuts by the Federal Reserve in 2026.

Yun also addressed what was a foreshadowing federal government shutdown and said that he hoped safeguards would be put in place to prevent any delays in mortgage financing that might be caused by departmental shutdowns.

On the positive side, he related that wage growth of 3.7% is outpacing the inflation rate of 2.9%. On the local level, he related that New York State has 3.1% more jobs than it had pre-COVID-19 and that home sales activity in the HGAR region is outperforming national sales volume and price gain averages.

Yun said that NAR has downgraded some of its industry-related projections for 2025, but has upgraded its forecasts for 2026.

In terms of existing home sales, NAR now expects a 3% increase in 2025 as compared to 2025, while it anticipates a 14% jump in existing sales in 2026 as compared to this year. New home sales in 2025 will rise 5% this year and again by the same level next year, Yun related.

The national media home sale price will rise just 1% in 2025, but increase by 4% in 2026.

The average 30-year mortgage interest rate will end the year at approximately 6.7%, but decline to 6.0% in 2026, Yun related.

After his presentation when asked by Real Estate In-Depth if he felt mortgage rates could fall below 6% in 2026, Yun responded, “I think people should consider 6% as the new normal, maybe a little bit lower or a little bit above. 5.5% there is some possibility, but 5% overall I really don’t think that will happen.”

Yun added that anytime there is even a small movement downward in interest rates, more prospective homeowners can then qualify for a home mortgage, which increases home sales volume.

“Even if we go to 6%, that is going to help more buyers come into the market. If it goes to 5.5%, you are looking at the market needing more inventory to accommodate that growth (in prospective buyers),” he said.

Yun also believes that inflation is under control and that any adverse impact caused by tariffs will be offset by falling rents in an overbuilt multifamily market.