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The downturn in the US housing market isn’t ending anytime soon, Fannie Mae warned.
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That’s because mortgage rates are set to stay elevated if the US avoids a recession.
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Even if the US does tip into recession, tight financial conditions will still weigh on home sales.
The housing market isn’t coming out of its deep freeze anytime soon, even if the US economy manages to steer away from a recession in the next year, according to Fannie Mae economists.
The government-sponsored mortgage giant highlighted the stagnant US housing market, with existing home sales down 18.9% year per-year in June, according to Fannie Mae’s estimate. Mortgage applications, similarly, have fallen to a 28-year-low.
That slowdown has largely been spurred by high mortgage rates, which have pushed buyers and sellers out of the market. That’s likely to continue no matter what happens to the US economy over the next 12 months, the firm said in a note in August.
“With an ongoing tight supply of existing homes for sale and the recent rise in 30-year fixed-rate mortgage rate to around 7%, we expect home sales in 2023 to remain near the lowest annual level since 2009,” Fannie Mae economists said. “Regardless of whether a soft landing is achieved over the coming year, we expect existing home sales to stay subdued and within a tight range.”
That’s because the US avoiding a recession means real interest rates in the economy will likely stay elevated, which will influence mortgage rates to stay…
