The US housing market is in a recession, one leading economist says.

The US housing market is in a recession, Pantheon Macroeconomics’ Ian Shepherdson said.
House prices are down about 5% since May, and may slump another 20% by mid-2023, the economist said.
Federal Reserve officials have indicated they want a correction in the housing market.

The US housing market is in a recession, and home prices are poised to tumble another 20% by next summer, a top economist has warned.

“The plunging trend in sales has further to go, and prices are falling,” Ian Shepherdson, the chief economist of Pantheon Macroeconomics, said in a research note published on Wednesday.

Shepherdson and his team estimated that seasonally adjusted existing-home prices slid by 0.7% in August, the third monthly decline in a row. Prices are now down about 5% from their May peak, and are poised to slide further despite a tight supply of homes, they said.

“The very low level of inventory means that a headlong collapse in prices is unlikely, but we still expect a total decline of up to 20% by the middle of next year,” the economists wrote.

“Housing, in short, is in recession, and everything connected to housing either is in recession now or soon will be,” they added.

However, they emphasized the current housing downturn won’t crash the rest of the US economy, as the market has fewer entrenched risks than during the mid-2000s housing bubble.

Still, there are growing concerns about the sector. Inflation, which surged to a 40-year high in June and remained above 8% in August, has squeezed consumers’ budgets.

The Federal Reserve has reacted to the threat by hiking interest rates from near zero at the start of this year to over 3%, raising borrowing costs and driving long-term mortgage rates to north of 6% for the first time since …read more

Source:: Business Insider

      

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