The NAR said it anticipated a slightly negative impact on the housing market from the Republican overhaul of the U.S. tax code.
The biggest overhaul of the tax system in more than 30 years, which could be signed into law by President Donald Trump soon, will cap the deduction for mortgage interest at $750,000 in home loan value for residences bought from Jan. 1, 2018, through Dec. 31, 2025.
After Dec. 31, 2025, the cap would revert to $1 million in loan value. It suspends the deduction for interest on home equity loans from Jan. 1, 2018 until 2026. The NAR said about 94 percent of homeowners would fall under the $750,000 cap.
Moody's Analytics chief economist Mark Zandi has warned that the tax revamp would weigh on house prices, with the Northeast corridor, South Florida, big Midwestern cities, and the West Coast suffering the biggest price declines.
"The hit to national house prices is estimated to be near 4 percent at the peak of their impact in summer 2019," said Zandi. "That is, national house prices will be approximately 4 percent lower than they would have been if there was no tax legislation."
The PHLX housing index was trading higher in line with a broadly firmer stock market. The dollar slipped against a basket of currencies. Prices for U.S. Treasuries fell.
The government reported on Tuesday that single-family homebuilding, which accounts for the largest share of the housing market, jumped 5.3 percent in November to the highest level since September 2007.
Permits for the future construction of these housing units rose 1.4 percent to a level not seen since August 2007. Housing completions continued to lag at a rate of 1.116 million units.
Realtors estimate that the housing starts and completions rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.