According to economists, the US housing slump might cause a 20% drop in home prices.

0
1519
20% drop in housing value (6)

A leading economist predicts that by mid-2023, U.S. home values could decline by as much as 20% from the record high reached earlier this year.

According to economists, the US housing slump might cause a 20% drop in home prices.

In an analyst report released this week, Pantheon Macroeconomics’ Ian Shepherdson stated that housing values have already dropped 5% from their peak in May. His predictions indicate that existing house sales, which are seasonally adjusted, fell 0.7% in August, the third consecutive monthly fall.

US housing

Shepherdson stated in the memo that “prices are falling” and that “the downward trend in sales has farther to go.”

Forcing potential purchasers to cut back on spending, excruciatingly high inflation and growing borrowing costs have proven to be a deadly combination for the home market. Shepherdson and other analysts concur that the housing market is weak.

According to economists, the US housing slump might cause a 20% drop in home prices.

The present recession, however, is not anticipated to spread to the rest of the U.S. economy, unlike the housing catastrophe of 2008, which contributed to a larger global financial crisis. This is due to the market having less long-term risk than it did during the housing bubble in the middle of the 2000s.

“A precipitous drop in pricing is unlikely due to the extremely low level of inventory, but we still predict a total decline of up to 20% by the middle of next year,” Shepherdson added.

The once-hot property market has suffered as a result of painfully high inflation and rising borrowing costs, which have forced potential purchasers to cut back on their spending.

According to economists, the US housing slump might cause a 20% drop in home prices.

In an effort to rein in spiraling inflation, the Federal Reserve is tightening policy at the quickest rate in three decades. This year, policymakers have approved five straight rises in interest rates, including three consecutive increases of 75 basis points each in June, July, and September. Chairman Jerome Powell hinted that another 125 basis points of rate rises are possible this year at the conclusion of their most recent meeting this week.

20% drop in home prices.

According to Freddie Mac, the rate hikes have sent the average 30-year fixed mortgage rate above 6%, which is the highest level since the 2008 financial crisis.

Mortgage rates are rising, which is causing a quick decline in demand for new homes and a subsequent decline in property values.

In a new survey released on Wednesday, the National Association of Realtors stated that median home prices had fallen somewhat from the peak of $413,800 reached in June to $389,500. In the 126th month in a row of year-over-year home price rises, home prices are still up 7.7% from the same time last year. The record-breaking longest streak is that one.

LEAVE A REPLY

Please enter your comment!
Please enter your name here