Economic and Housing Market Outlook Lawrence Yun, PhD Chief Economist and Senior Vice President, Research NATIONAL ASSOCIATION OF REALTORS®
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Economic and Housing Market Outlook
Lawrence Yun, PhDChief Economist and Senior Vice President, ResearchNATIONAL ASSOCIATION OF REALTORS®
16000.016500.017000.017500.018000.018500.019000.019500.0
Q1/
2018
Q2/
2018
Q3/
2018
Q4/
2018
Q1/
2019
Q2/
2019
Q3/
2019
Q4/
2019
Q1/
2020
Q2/
2020
Q3/
2020
Q4/
2020
Q1/
2021
Annualized GDP in $2012 Billion Dollars
Economy … swiftest decline … then fast recovery … Current at 99% of prior peak in 2021 Q1
Source: BEA
Massive Savings … turns to Spending … GDP to be all-time high
GDP (% change from a year ago)
Personal Income(% change from a year ago)
Savings(% change from a year ago)
2020 Q2 -9.0% +10.7% +302%
2021 Q1 +0.4% +15.6% +158%
Revenge Travel Spending at Restaurants and Lodging?
500.0550.0600.0650.0700.0750.0800.0850.0900.0
2007
-Q1
2007
-Q4
2008
-Q3
2009
-Q2
2010
-Q1
2010
-Q4
2011
-Q3
2012
-Q2
2013
-Q1
2013
-Q4
2014
-Q3
2015
-Q2
2016
-Q1
2016
-Q4
2017
-Q3
2018
-Q2
2019
-Q1
2019
-Q4
2020
-Q3
In 2
012
Billi
on D
olla
rs (a
nnua
lized
) Food services and accommodation
Source: BEA
Worldwide Comparisons of GDP Growth Rates
Source: The Economist Magazine
Country 2020 Q4 from a year ago
2021 Forecast
United States -2.4 +5.5
Great Britain -7.3 +5.1
Canada -3.2 +4.8
Euro Area -4.9 +4.1
Russia -1.8 +2.7
Australia -1.1 +3.1
Japan -1.4 +2.7
Taiwan +5.1 +4.5
Global GDP Growth Rate
Source: The Economist Magazine
Country 2020 Q4 from a year ago
2021 Forecast
United States -2.4 +5.5Great Britain -7.3 +5.1
Canada -3.2 +4.8Euro Area -4.9 +4.1
Russia -1.8 +2.7Australia -1.1 +3.1
India 0.4 ???Japan -1.4 +2.7
Taiwan +5.1 +4.5China +18.3 +8.5
GDP Comparison U.S. versus China
Source: U.S. Bureau of Economic Analysis and China National Bureau of Statistics
0
5000
10000
15000
20000
2500019
70
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018
2021
$ billion
After Mao’s death in 1976, China lifts off
Source: BLS
115000
120000
125000
130000
135000
140000
145000
150000
155000
2000- Jan
2001- Jan
2002- Jan
2003- Jan
2004- Jan
2005- Jan
2006- Jan
2007- Jan
2008- Jan
2009- Jan
2010- Jan
2011- Jan
2012- Jan
2013- Jan
2014- Jan
2015- Jan
2016- Jan
2017- Jan
2018- Jan
2019- Jan
2020- Jan
2021- Jan
In thousands
U.S. economy is fully back … But not Jobs … 95% of prior peak … need 8 million more jobs to reach pre-pandemic levels
Monthly Job Additions … Stimulus Passage
Source: BLS
-25000
-20000
-15000
-10000
-5000
0
5000
10000
2020 -Jan
2020 -Feb
2020 -Mar
2020 -Apr
2020 -May
2020 -Jun
2020 -Jul
2020 -Aug
2020 -Sep
2020 -Oct
2020 -Nov
2020 -Dec
2021 -Jan
2021 -Feb
2021 -Mar
In thousands
Source: BEA
Source: BLS
012345678
Logging Construction Manufacturing All
%
Weekly Earnings Growth Rate from a year ago
Source: BLS
Job Openings … All-time High
3000
4000
5000
6000
7000
8000
9000
2015
- Ja
n
2015
- Ap
r
2015
- Ju
l
2015
- O
ct
2016
- Ja
n
2016
- Ap
r
2016
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l
2016
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ct
2017
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2017
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r
2017
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l
2017
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ct
2018
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2018
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r
2018
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2018
- O
ct
2019
- Ja
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2019
- Ap
r
2019
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l
2019
- O
ct
2020
- Ja
n
2020
- Ap
r
2020
- Ju
l
2020
- O
ct
2021
- Ja
n
In thousands
Source: BLS
-2
-1
0
1
2
3
4
5
2015
- Ja
n20
15 -
Mar
2015
- M
ay20
15 -
Jul
2015
- Se
p20
15 -
Nov
2016
- Ja
n20
16 -
Mar
2016
- M
ay20
16 -
Jul
2016
- Se
p20
16 -
Nov
2017
- Ja
n20
17 -
Mar
2017
- M
ay20
17 -
Jul
2017
- Se
p20
17 -
Nov
2018
- Ja
n20
18 -
Mar
2018
- M
ay20
18 -
Jul
2018
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p20
18 -
Nov
2019
- Ja
n20
19 -
Mar
2019
- M
ay20
19 -
Jul
2019
- Se
p20
19 -
Nov
2020
- Ja
n20
20 -
Mar
2020
- M
ay20
20 -
Jul
2020
- Se
p20
20 -
Nov
2021
- Ja
n20
21 -
Mar
Consumer Price Inflation Crosses 2% … who cares?
Consumer Price Inflation … Everything is more expensive? Item % change
March 2020 to March 2021
Airline fare -15%
Tickets for Sporting Events -12%
Car Insurance -2.5%
Clothes -2.5%
College Tuition 0.3%
Renter’s Rent 1.3%
New Cars/Trucks 1.5%
Nursing Home Service 3.3%
Moving and Storage 5.3%
Beef 7.1%
Appliance 7.9%
Used Cars/Trucks 9.4%
Gasoline 22.5%
Home Price Not included
Source: BLS
Pipeline Inflation Pressure … Producer Prices on Construction Materials
200210220230240250260270280290
2015
- Ja
n20
15 -
Mar
2015
- M
ay20
15 -
Jul
2015
- Se
p20
15 -
Nov
2016
- Ja
n20
16 -
Mar
2016
- M
ay20
16 -
Jul
2016
- Se
p20
16 -
Nov
2017
- Ja
n20
17 -
Mar
2017
- M
ay20
17 -
Jul
2017
- Se
p20
17 -
Nov
2018
- Ja
n20
18 -
Mar
2018
- M
ay20
18 -
Jul
2018
- Se
p20
18 -
Nov
2019
- Ja
n20
19 -
Mar
2019
- M
ay20
19 -
Jul
2019
- Se
p20
19 -
Nov
2020
- Ja
n20
20 -
Mar
2020
- M
ay20
20 -
Jul
2020
- Se
p20
20 -
Nov
2021
- Ja
n20
21 -
Mar
Farm Grain Prices:
Kansas City Wheat
Central Illinois Corn
Minneapolis Oat
2.002.503.003.504.004.505.005.506.006.507.00
2019
- Ja
n
2019
- M
ar
2019
- M
ay
2019
- Ju
l
2019
- Se
p
2019
- N
ov
2020
- Ja
n
2020
- M
ar
2020
- M
ay
2020
- Ju
l
2020
- Se
p
2020
- N
ov
2021
- Ja
n
2021
- M
ar
Price per bushel
Source: Federal Reserve
The Dollar … The King of Currencies ?? … Recent Weakening Dollar… adds to inflationary pressure
85
90
95
100
105
110
115
2015
- Ja
n
2015
- Ap
r
2015
- Ju
l
2015
- O
ct
2016
- Ja
n
2016
- Ap
r
2016
- Ju
l
2016
- O
ct
2017
- Ja
n
2017
- Ap
r
2017
- Ju
l
2017
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ct
2018
- Ja
n
2018
- Ap
r
2018
- Ju
l
2018
- O
ct
2019
- Ja
n
2019
- Ap
r
2019
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l
2019
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ct
2020
- Ja
n
2020
- Ap
r
2020
- Ju
l
2020
- O
ct
2021
- Ja
n
2021
- Ap
r
Source: BLS
Primary Rent (and owner’s rent) had been decelerating … but will soon pick up?
-2
-1
0
1
2
3
4
5
2015
- Ja
n
2015
- Ap
r
2015
- Ju
l
2015
- O
ct
2016
- Ja
n
2016
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r
2016
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l
2016
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ct
2017
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n
2017
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2017
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2017
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ct
2018
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2018
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2018
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2018
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ct
2019
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2019
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2019
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2019
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ct
2020
- Ja
n
2020
- Ap
r
2020
- Ju
l
2020
- O
ct
2021
- Ja
n
2021
- Ap
r
Source: ApartmentList.com
Source: Census
Rental Households … collapsed … now returning
39000
40000
41000
42000
43000
44000
45000
2018- Q1
2018- Q2
2018- Q3
2018- Q4
2019- Q1
2019- Q2
2019- Q3
2019- Q4
2020- Q1
2020- Q2
2020- Q3
2020- Q4
2021- Q1
In thousands
Source: NAR
% of REALTORS® expecting Rent Strengthening in upcoming months
0
10
20
30
40
50
60
70
2020 -Jan
2020 -Feb
2020 -Mar
2020 -Apr
2020 -May
2020 -Jun
2020 -Jul
2020 -Aug
2020 -Sep
2020 -Oct
2020 -Nov
2020 -Dec
2021 -Jan
2021 -Feb
2021 -Mar
Existing Home Sales (seasonally adjusted annualized rate) … Topping Out?
Source: NAR
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
7,000,000
2018
- Ja
n20
18 -
Feb
2018
- M
ar20
18 -
Apr
2018
- M
ay20
18 -
Jun
2018
- Ju
l20
18 -
Aug
2018
- Se
p20
18 -
Oct
2018
- N
ov20
18 -
Dec
2019
- Ja
n20
19 -
Feb
2019
- M
ar20
19 -
Apr
2019
- M
ay20
19 -
Jun
2019
- Ju
l20
19 -
Aug
2019
- Se
p20
19 -
Oct
2019
- N
ov20
19 -
Dec
2020
- Ja
n20
20 -
Feb
2020
- M
ar20
20 -
Apr
2020
- M
ay20
20 -
Jun
2020
- Ju
l20
20 -
Aug
2020
- Se
p20
20 -
Oct
2020
- N
ov20
20 -
Dec
2021
- Ja
n20
21 -
Feb
2021
- M
ar
New Home Sales … Holding On
Source: HUD/Census
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2018
- Ja
n20
18 -
Feb
2018
- M
ar20
18 -
Apr
2018
- M
ay20
18 -
Jun
2018
- Ju
l20
18 -
Aug
2018
- Se
p20
18 -
Oct
2018
- N
ov20
18 -
Dec
2019
- Ja
n20
19 -
Feb
2019
- M
ar20
19 -
Apr
2019
- M
ay20
19 -
Jun
2019
- Ju
l20
19 -
Aug
2019
- Se
p20
19 -
Oct
2019
- N
ov20
19 -
Dec
2020
- Ja
n20
20 -
Feb
2020
- M
ar20
20 -
Apr
2020
- M
ay20
20 -
Jun
2020
- Ju
l20
20 -
Aug
2020
- Se
p20
20 -
Oct
2020
- N
ov20
20 -
Dec
2021
- Ja
n20
21 -
Feb
2021
- M
ar
Record Low Inventory … Multiple Offers … Temptations to Discrimination?
Source: NAR
700,000
1,200,000
1,700,000
2,200,000
2,700,000
3,200,000
3,700,000
4,200,000
4,700,00020
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
1820
1920
2020
21
Record Low Inventory … Record High Membership
Source: NAR
700,000
1,200,000
1,700,000
2,200,000
2,700,000
3,200,000
3,700,000
4,200,000
4,700,00020
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
1820
1920
2020
21
Source: NAR
Inventory … Existing-to-New Ratio … Are homebuilders no longer friends?
02468
101214161820
Inventory by Price Buckets
Source: NAR
-50
-40
-30
-20
-10
0
10
$0 to$100,000
$100 K to$250 K
$250 K to$500 K
$500 K to$750 K
$750 K to$1 million
over $1million
% change from a year ago
Home Sales by Price Buckets
Source: NAR
-40
-20
0
20
40
60
80
100
$0 to$100,000
$100 K to$250 K
$250 K to$500 K
$500 K to$750 K
$750 K to$1 million
over $1million
% change from a year ago
Source: NAR
Median Days on Market till Ratified Contract
0
20
40
60
80
100
12020
11 -
May
2011
- Au
g20
11 -
Nov
2012
- Fe
b20
12 -
May
2012
- Au
g20
12 -
Nov
2013
- Fe
b20
13 -
May
2013
- Au
g20
13 -
Nov
2014
- Fe
b20
14 -
May
2014
- Au
g20
14 -
Nov
2015
- Fe
b20
15 -
May
2015
- Au
g20
15 -
Nov
2016
- Fe
b20
16 -
May
2016
- Au
g20
16 -
Nov
2017
- Fe
b20
17 -
May
2017
- Au
g20
17 -
Nov
2018
- Fe
b20
18 -
May
2018
- Au
g20
18 -
Nov
2019
- Fe
b20
19 -
May
2019
- Au
g20
19 -
Nov
2020
- Fe
b20
20 -
May
2020
- Au
g20
20 -
Nov
2021
- Fe
b
-60%-40%-20%
0%20%40%60%80%
4/5
/20
204
/19/
2020
5/3/
2020
5/17
/20
205/
31/2
020
6/14
/20
206/
28/2
020
7/12
/20
207/
26/2
020
8/9/
2020
8/23
/20
209/
6/20
209/
20/2
020
10/4
/20
2010
/19/
2020
11/1
/20
2011
/15/
2020
12/6
/20
2012
/20
/20
201/
3/20
211/
17/2
021
1/31
/20
212/
14/2
021
2/28
/20
213/
14/2
021
3/28
/20
214
/11/
2021
4/2
5/20
215/
9/20
21
% Y/Y New Contracts % Y/Y New Listings
Weekly Trends on New Contracts and New Listings (4-week moving average)
Housing Starts … Single-family and Multifamily
Source: HUD/Census
0
200
400
600
800
1000
1200
1400
2018
- Ja
n20
18 -
Mar
2018
- M
ay20
18 -
Jul
2018
- Se
p20
18 -
Nov
2019
- Ja
n20
19 -
Mar
2019
- M
ay20
19 -
Jul
2019
- Se
p20
19 -
Nov
2020
- Ja
n20
20 -
Mar
2020
- M
ay20
20 -
Jul
2020
- Se
p20
20 -
Nov
2021
- Ja
n20
21 -
Mar
In thousand units
0
200
400
600
800
1000
1200
1400
2018
- Ja
n20
18 -
Mar
2018
- M
ay20
18 -
Jul
2018
- Se
p20
18 -
Nov
2019
- Ja
n20
19 -
Mar
2019
- M
ay20
19 -
Jul
2019
- Se
p20
19 -
Nov
2020
- Ja
n20
20 -
Mar
2020
- M
ay20
20 -
Jul
2020
- Se
p20
20 -
Nov
2021
- Ja
n20
21 -
Mar
In thousand units
Annual Housing Starts from 1960
Source: NAR
0
500
1000
1500
2000
2500
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020
In thousand units
Future Inventory … Where? Most active single-family home construction in the past 12 months
Source: NAR analysis of HUD data
0
10000
20000
30000
40000
50000
60000
Biggest % gain in single-family home construction
Source: NAR analysis of HUD data
0%20%40%60%80%
100%120%140%160%180%
Less Hurried Decisions and Frenzy by year-end and 2022
More Supply
- New Home Construction- Winding Down of Mortgage Forbearance- Vaccination
Less Demand
- Higher Home Prices- Higher Mortgage Rate
Mortgage Rates Rising … 10-year Treasury Rates Rising … Fed Funds Rate Holding
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2020- Jan
2020- Feb
2020- Mar
2020- Apr
2020- May
2020- Jun
2020- Jul
2020- Aug
2020- Sep
2020- Oct
2020- Nov
2020- Dec
2021- Jan
2021- Feb
2021- Mar
2021- Apr
2021- May
Source: BLS
Monthly Mortgage Payment … at prevalent price and interest rate
900
950
1000
1050
1100
1150
1200
2020 -Mar
2020 -Apr
2020 -May
2020 -Jun
2020 -Jul
2020 -Aug
2020 -Sep
2020 -Oct
2020 -Nov
2020 -Dec
2021 -Jan
2021 -Feb
2021 -Mar
Affordability Scenarios
March 2020
March 2021
Scenario 1
Scenario 2
Scenario 3
Home Price $282,600 $334,500 $334,500 $350,000 $350,000
Mortgage Rate 3.5% 3.1% 3.5% 3.1% 3.5%
Monthly Mortgage Payment
$1016 $1147 $1202 $1196 $1257
Office Absorption
Source: Cushman-Wakefield
-50
-40
-30
-20
-10
0
10
20
2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1
million square feet
Workers are slowly returning to the office
5.7
35.4
21
2019
20-M
ay
20-Ju
n
20-Ju
l
1-Au
g
1-Se
p
1-O
ct
1-N
ov
1-De
c
Jan-
21
Feb-
21
Mar
-21
Percent of Employed Who TeleworkedWorkers 16 years old and over
Source: US Census Bureau American Community Survey and Bureau of Labor Statistics Supplemental Survey
Kastle System Key Barometer … Back to Office … Dallas 40% … SF and NY 15%
More than half of NAR commercial members reported more companies leasing smaller offices and < 2 year lease terms
Source: NAR Commercial Real Estate Quarterly Market Survey conducted in collaboration with RLI, SIOR, CCIM, IREM, CRE
62%
69%70%
2020.Q3 2020.Q4 2021.Q1
Percent of REALTOR®respondents who reported "More" companies leasing smaller square footage due
to working from home
59%
63%
57%
2020.Q3 2020.Q4 2021.Q1
Percent of REALTOR®respondents who reported "More" short-term
office leases of 2 years or less
Economic Forecast
Source: NAR
2019 2020 2021Forecast
GDP Growth 2.3% -3.5% +4.5%
Job Gains +2 million - 9 million + 4 million
10-Year Treasury
2.1% 0.9% 1.6%
Consumer Price Inflation
1.8% 1.3% 2.7%
Housing Market Forecast
Source: NAR
2019 2020 2021Forecast
Mortgage Rates 3.9% 3.0% 3.2%
New Home Sales +11% +19% +20%
Existing Home Sales 0% +6% +10%
Home Price +5% +9% +7%
Revenue +5% +15% +17%
Pandemic … Repurposing Properties … Examples
Source: 2021 NAR Survey on Conversion of Hotels/Motels for Multifamily Housing
Residence Inn by Marriott in Winston Salem, NC 88-room extended-stay hotel converted into resort-style living apartments (2-bedroom unit starting at $900) in 2020 using private development financing
Days Inn in Branson, Missouri423-room converted into affordable housing (1-bedroom rent at $695) in 2020 using private development financing
Luna Lodge in Albuquerque, Mexico28-room hotel on the National Register of Historic Places converted into a low-income housing (1-bedroom rent at $535) in 2013 using Historic Tax Credit
Potential Sweeping Changes
1918-19 Spanish Flu- Roaring 20s … Great Gatsby- 1930s Fascism and Nationalism- 1940s Deathliest War
2020 Coronavirus Aftermath- Lockdown/Protest/Election- Work-from-Home … Suburbs?- Wider School and Location Choices?- Green and Tech and Repurposed Homes?- Everyone has Dachas?- U.S. and China Conflict?
Wealth Comparison
Source: Federal Reserve and NAR estimates
$6,300
$255,000
$8,000
$297,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Renter Homeowner2016 2019 2020 20212016 2019 2020 2021
Most Worthless and Most Useful Activity
Simultaneously
Which Activity?
Spelling Bee ???Indian-Americans … Highest Household Income at $120,000
Sources: White House, SC Governor’s Office, AP Photo of Spelling Bee Winners
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