Home News The housing market is entering the ‘most significant contraction in activity since 2006,’ says Freddie Mac economist

The housing market is entering the ‘most significant contraction in activity since 2006,’ says Freddie Mac economist

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The pandemic housing boom is finally driven by smoke. Home sales are declining.. Inventory level is rising..When Home retailers are lowering their list prices with the fastest clip since 2019.

this Big deceleration Much bigger than the seasonal cooldown. The Economic shock due to rising mortgage rates meaning Borrowers have grown invisiblely thin since 2006.. As a result, homebuyers in April and May have finally dropped to record home prices. This shift, Moody’s Mark Zandi, Chief Economist at Analytics, said: luckteeth Start of full-scale housing renovation..Zandy has year-on-year growth in U.S. home prices Highest ever 20.6% To 0% by this time next year.

On wednesday we learned it US purchase offers fell by 20.5% last week From the same week in 2021, according to the Mortgage Bankers Association. Compared to the height of the pandemic housing boom, purchase applications have decreased by 40%.

Thursday, Freddie Mac Deputy Chief Economist Len Kiefer Tweet What this downward shift means: “The US housing market is in the early stages of the most significant contraction of activity since 2006.”

View this interactive chart on Fortune.com

Of course, the slowdown in this house is by design. Earlier this year, financial markets raised mortgage rates in response to Federal Reserve measures.I saw it 30-year average fixed mortgage rate It surged from 3.11% in December to 5.09% last week. From the Fed’s point of view, if we can slow down the housing market, which is the main driver of inflation, we could start curbing overall inflation.

This sharp reduction in mortgage applications is similar to what began in 2006. Of course, it turned out to be the beginning of a slump in housing that led to a national housing collapse in 2008. But Zandy doesn’t think we are. He returned there. This time, the homeowner’s financial condition is much better. In addition, he says, this historic practice was not underpinned by the credit rush of bad mortgages as seen in the early 2000s.

Zandy does not expect US home prices to fall nationwide next year. However, he predicts that this “housing fix” is likely to result in a significant 5% to 10% price cut. “Overrated” housing markets like Boise and Charlotte..

Logan Mohtashami, Principal Analyst at HousingWire, has publicly called for a mortgage rate hike for 2022. In his view, increasing inventories required cooling the “terribly unhealthy” housing market. Historically low levels of inventories reached during the pandemic gave homebuyers little choice but to raise prices. Mohtashami predicts that in order to return to a healthy housing market, we need to see inventories rise from 1.52 million to 1.93 million units nationwide.The latest readings from the National Association of Real Estate Agents are in stock With only 1.03 million unit.

“My concern in the future is that if interest rates fall again, some of the inventory growth we had will be gone,” says Mohtashami. luck..

If you need more housing data, follow us on Twitter. @NewsLambert..

This story was originally Fortune.com

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