Home sales are set to slump to a new low, as the US housing market can't start recovering so long as mortgage rates stay elevated, Pantheon Macroeconomics' chief economist Ian Shepherdson said.
"We are baffled by the emerging narrative in the commentariat that housing is now recovering, because it isn't," Shepherdson said in a note on Tuesday, pointing to growing optimism for a housing market recovery as mortgage rates pull back slightly.moved 6 basis-points lower to 7% over the past week, according to Bankrate's most recent survey.
But Pantheon said that doesn't change the bigger picture in the housing market, which is that a durable recovery won't happen until affordability improves.. Mortgage rates are still hovering near a 20-year-high, and a recovery in home sales is unlikely until mortgage rates begin to drop more meaningfully, Shepherdson said.mortgage rates will pull back to just 6%"The bulk of the drop in homes prices is yet to come; the lagged effect of the plunge in sales points to a steep and sustained drop," Shepherdson said.
Experts have sounded the alarm on the US housing market, as higher rates have shut out both prospective buyers and sellers from the housing market, which have sent sales lower and prices higher.
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