Economists warn housing market crisis looms

Experts are concerned that the housing market slump will impact the broader economy.

Economists warn of looming crisis in housing market

The housing market is facing a severe downturn, according to Mark Zandi, chief economist at Moody's Analytics. Zandi signals a significant deterioration in home sales, construction, and property values due to persistently high mortgage rates near 7%. He notes that builders are delaying land purchases and many are exiting the market entirely because it has become too costly to operate. Recent data shows a 13.7% drop in new single-family home sales and a 4.6% decline in housing starts. Overall, the slowing housing market could soon be a major hindrance to economic growth.

The state of the housing market signifies deeper economic troubles ahead. With rising mortgage rates and slowing sales, the situation may evolve into a recession warning. Builders cutting prices and delaying land purchases raise a red flag about market confidence. This turmoil not only impacts buyers and sellers but could also reflect on job growth, as construction is a pivotal economic driver. As Zandi pointedly states, the housing market's woes signal a potential headwind for the U.S. economy.

Highlights

The future of the housing market remains uncertain as economists keep a watchful eye on mortgage rates.