US home price plunge is ‘just beginning’ as housing market rapidly cools: economist

is likely “just beginning” as decades-high mortgage rates cause a downturn in the housing market, a prominent economist cautioned Friday.

The warning from Pantheon Macroeconomics chief economist Ian Shepherdson followed more dismal data that showed a slowdown in housing activity. Pending home sales — a measure based on signed contracts — plunged 10.2% in September, according to the National Association of Realtors.But cratering demand has only recently started to result in lower home prices — meaning more financial pain is on the way for prospective sellers.

“The bad news is that prices have much further to fall before the market adjusts fully to the collapse in demand,” Shepherdson said in a note to clients. “Home prices have only recently started to decline on a month-to-month basis,” Shepherdson added. “The resilience in prices was made possible by a lack of existing homes on the market, but supply is now rising — albeit slowly — as homeowners who previously held off on selling worry that further delays will mean they fetch a much lower price.”

30 to 50% drop in value incoming in many markets. 2008 crash was 33% average.

Is that Pelosi’s house?

But unlike 2007-2010 when housing was overbuilt and subprime mortgages were blowing up, tight supply and 90 percent of mortgages having low fixed rates will limit the downside of values. A return to the long-term trend line would see a 10 to 15 percent drop.

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