“I don’t think home sales will ever stop. They will only slow down. People will still be able to sell homes, but it may take a little longer than it used to.“
One economist says the US housing sector is going through its biggest downturn in more than a decade. But don’t expect prices to drop to what they are now.
“The US housing market is in the early stages of the most significant contraction in activity since 2006,” said Lynne Kiefer, deputy chief economist at Freddie Mac FMCC,
“It hasn’t appeared in many data series yet, but mortgage applications indicate a significant drop over the summer,” he explained. He said mortgage purchase orders are down 40% from their most recent peak in 2021.
Purchases and refinancing actually go back to Lowest level in 22 years.
In an interview with MarketWatch, Keifer said that mortgage applications as a data point “give you an idea of where the market might be headed, because these are the early stages when people are looking to buy a home. And if the volume of applications drops, that suggests that in a month, a month and a half, Mortgage facilities to close homes will also decrease.”
Kiefer expects home sales to slow down “a bit over the summer” from now on.
while, Freddy Mac’s data was released Thursday morning He revealed rising mortgage rates on the back of rising interest rates and inflation.
To be clear, “I don’t think home sales are going to stop completely,” Keefer stressed. “They will only slow down. People will still be able to sell homes, but it may take a little longer than it used to.”
Are prices going down as a result of “deflation”?
While some might jump to the conclusion that the weaker data represents a potential decline in home prices, Experts warn otherwise.
“Does this mean that home prices will collapse? Kiefer said.
Freddie Mac’s research shows that when interest rates go up, while home sales and mortgage assets go up, home prices won’t necessarily go down. or go up. “They tend to be more sticky,” Kiefer said.
“And although the growth rate tends to slow, it does not tend to decline,” he added.
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