Recent reports indicate that the housing market is deteriorating, with pending home sales hitting an all-time low since 2001, down 7.3% from the previous month and 11.3% year-over-year. This decline coincides with rising mortgage rates, which averaged 7.43% in September, and are expected to increase further if the Fed raises interest rates as anticipated.
The National Association of Realtors noted that housing starts also fell by 5.2%, significantly worse than expected. Economists like Chris Rupkey and Lawrence Yun highlight that unless policies change to improve affordability, the housing market may enter a prolonged slump.
Goldman Sachs forecasts a continued decline in residential investment and existing home sales, attributing this to the 'lock-in' effect where homeowners are reluctant to sell due to higher borrowing costs. While some analysts suggest that mortgage rates may have peaked, the overall outlook for the housing market remains bleak, with expectations of further weakening before any stabilization occurs