US home sales and price declines are likely just beginning, a prominent economist warned Thursday.
Pantheon Macroeconomics chief and his economist Ian Shepherdson said in a note to clients that the recent housing market downturn "is still short of the bottom, especially when it comes to prices." said.
His forecast is after existing home sales fell 5.9% in July to a seasonally adjusted annualized rate of 4.81 million units, according to theNational Association of Realtors. that was issued.
Existing home sales fell for the sixth consecutive month, reaching the lowest level since May 2020. The drop coincided with a surge in mortgage rates last year, exacerbating affordability challenges for homebuyers facing steep selling prices.
“Given the extent to which demand is being squashed by rising interest rates, the bottom is still a bit off. Loan payments are no longer increasing, but are still up 51% year-over-year in July," Shepherdson said in a note to customers.
"Worse still, the market is facing rapidly increasing supply and collapsing demand," he added.
Home prices skyrocketed during the COVID-19 pandemic, according to Shepard According to Song, it is even lower. That said, data from the NAR show that the median pre-owned home price for all home types in July was $403,800, up 10.8% from July 2021.
He was down 1.0% in July, his third straight decline, and a much larger drop before the market reached a new equilibrium. ,” added Shepherdson.
Some recent data points to the US housing market is sounding the alarm. Some experts warn that a fix is in the works.
Earlier this week, the National Association of Home Builders declared a "housing recession"due to plummeting builder confidence, rising construction costs and rising mortgage rates.
The NAR has expressed a more optimistic outlook, with Lawrence Yun, the group's chief economist, saying the country "is witnessing a housing recession in terms of declining home sales and home construction. points out, "It's not a recession in housing prices."
The housing market has been hit by the Federal Reserve's recent tightening efforts. has been significantly affected by monetary policy due to rate hikes.
In the minutes of his July meeting of the Federal Open Market Committee, officials said "housing activity has weakened significantly" and predicted "a continued slowdown in housing activity."
Mr. Shepardson argued that ``the housing market turmoil alone will not change the Fed's policy course.''
"However, he will set off alarm bells for FOMC members who are concerned about overdoing the pace of tightening. This could lead to the Fed pushing for his 50bp rate hike in September. more likely to migrate to.”
