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NAR Chief Economist Lawrence Yun Gives Market Update and Forecast at Virtual Legislative Meetings
By Liz Dominguez
On May 13, Lawrence Yun, chief economist for the National Association of REALTORS® (NAR), presented the latest in market updates during the Residential Economic Issues & Trends Forum as part of the 2020 REALTORS® Virtual Legislative Meetings.
This year marks the first virtual iteration of NAR's legislative meetings, which bring around 10,000 REALTORS® to Washington, D.C., every May. More than 25,000 people had registered as of May 13.
One of the biggest takeaways in Yun's session: home prices are still on the rise. According to Yun, due to an inventory shortage pre-coronavirus, the current withdrawal of homes on the market is continuing to drive prices up.
"If anything, prices appear to be rising just as if we are in a pre-pandemic period," said Yun. "How is that the case when we have our economy on lockdown? We had an inventory shortage before the pandemic, and during the pandemic many listed properties were taken off the market. Therefore, we have even more of an acute housing shortage during the pandemic, and consequently the prices are not falling, and are in fact rising."
In terms of pricing, buyers are onboard—they have the same mentality they did at the beginning of the year.
"About 40 percent of the buyers indicate they don't anticipate any reduction in prices, so there are normal market price negotiating strategies happening."
What has drastically changed, however, are pending contracts. According to Yun, April should be the absolute low point for pending transactions, with May numbers picking up.
"It's not going to be the same as last year, but there will be less of a decline in the month of May," said Yun.
A good indicator of future market behavior? Days on market, said Yun.
"One of the most important economic variables that I'm looking at for the housing sector is Days on Market," he said. "If the properties linger on the market for a long time, it's still a struggle. But, right now, buyers are picking up the properties quickly, especially in the mid-price point."
Another indicator, mortgage applications. 
"Back in late March, early April, applications were down about 35 percent from the year before. But this week the rate is only down 10 percent," said Yun.
With many U.S. residents unemployed or furloughed due to the economic impacts of COVID-19, mortgages are at risk. Yun, however, noted that it's important to give homeowners a chance to bounce back.
"If the job market is not back up to say 90 percent of the normal capacity [in the next six months] then we may begin to see foreclosures unless Congress and the administration decide to prolong the mortgage forbearance period."
While there have been concerns that the pandemic will drive the economy into a depression, Yun said that is not something we have to worry about as things stand, though inflation challenges could arise in the long-term.
"The market slowdown occurred not due to something wrong with the economy, but due to the pandemic and the imposed lockdown," said Yun, who emphasized what should be of concern is the continued inventory shortage as we move toward post-pandemic recovery.
"If you build homes, it will help the economy recover faster. This will be key to the overall broader economic recovery," said Yun.
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Liz Dominguez is RISMedia's senior online editor.

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