- The US housing market will not collapse, but there will be a “big rise” in terms of price declines.
- Mark Zandi, chief economist at Moody’s, said more and more buyers were simply locked out of the market.
- Existing home sales in the United States hit a two-year low in June as prices remained record highs.
According to Mark Zandi, chief economist at Moody’s Analytics, the U.S. housing market is about to plunge into a “quick freeze” as borrowing spikes and stubborn highs keep more and more buyers out. increase.
Data on Wednesday showed that existing home sales fell to a two-year low in June. The National Association of Real Estate Agents reported that seasonally adjusted sales reached 5.12 million last month, the lowest since June 2020, below expectations of 5.38 million.
“The combination of soaring mortgages and soaring home prices makes sense that first-time homebuyers can’t afford to buy. They’re locked out, trade-in buyers sell and buy, they They need to get another mortgage at a higher rate and their monthly payments will go up, “Zandy told CNBC. “Power lunch” on wednesday.
“Therefore, demand is declining very rapidly. Well, I think housing is freezing rapidly,” he said.
Potential homebuyers face a toxic combination of mortgage rates above 5%, the highest since 2009, in line with the Federal Reserve’s rise in interest rates, which is fighting inflation at its 41-year high. -And the heated housing market This has been supported by ultra-low interest rates for over a decade.
Affordable housing prices have fallen, mortgage applications have fallen to their lowest prices in 22 years, and this year weighed on the timber and other construction materials market, which has fallen by nearly 50% in value.
US single-family homes have hit a record high of about $ 407,000, almost doubling in less than a decade. But Zandy says the numbers are median and do not reflect the fact that real estate prices are actually falling.
“Because first-time buyers are locked out, there are far more homes for sale at the high end of the market and far fewer homes for sale at the low end of the market, which raises their price readings. But the underlying price dynamics, they are declining very rapidly. “
Further concern about the outlook for home prices highlights last month that unsold home inventories surged nearly 10% and it’s taking time for properties to change hands.
“Looking at national inventories, the most exploited areas of the market entering this have increased significantly. Therefore, it will be all gathered in the coming months, and certainly by the end of the year. It suggests that we are entering the year of the year, and we will see weakness in actual home prices. “
“Well, that said, I’m not discussing the’crash’, but I’m just claiming there is a big rise in home prices. I think the market is under a lot of stress. “He added. ..
Charlie Bilello, founder of financial advisory firm Compound Capital Advisors, said Wednesday that the recession at the bottom of the housing market was happening. Arrival For the high end.
“Two years ago, the 30-year mortgage rate was 2.90% and the median existing home price in the United States was $ 294,000. Currently, the 30-year mortgage rate is 5.71%, the median of existing home prices. The value is $ 416,000.% Downpayment, which is a 98% increase in monthly payments (from $ 978 to $ 1,933), “he said in another word. Tweet..
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