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Home values could fall 20% next year…

Home prices have plunged during the second half of 2022 with demand for residential real estate cooling off in a number of states and cities across the U.S.. And prices could continue to fall by as much as 20% next year as mortgage rates climb and the housing market normalizes in wake of the pandemic, according to a noted Wall Street economist.Ian Sheperdson, chief economist with Pantheon Macroeconomics, said in a report this week that tumbling demand for homes amid sharply rising mortgage rates is weighing heavily on housing prices. “[W]e expect home sales to keep falling until early next year. By that point, sales will have fallen to the incompressible minimum level, where the only people moving home are those with no choice due to job or family circumstances,” he said. “Discretionary buyers are disappearing rapidly in the face of the near-400 [basis point] increase in rates over the past year.“Home sales fell to 4.7 million last month, down 1.5% from August, according to the National Association of Realtors. 

Rising interest rates could further tighten supplyMortgage rates have more than doubled this year. The average rate on a typical 30-year mortgage rose this wee …

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