-
US home sales are heading for their biggest slowdown since 2011, Fannie Mae said.
-
This is due to headwinds such as higher mortgage rates, while the US economy is weakening.
-
The mortgage finance giant expects the United States to enter a recession in the first half of 2024.
US home sales are heading for their biggest slowdown since 2011, Fannie Mae said.
The government-backed mortgage finance company forecast total home sales this year to fall to just 4.8 million, marking the slowest sales environment since 2011. That figure will improve only slightly in 2024, when total home sales are expected to reach 4.9 million, according to Fannie Mae economists. he said.
The decline in sales is being partly influenced by higher mortgage rates. The average rate for a 30-year fixed mortgage rose to 7.18%. According to Freddie Mac data last week. This means that Homebuyers are facing their highest borrowing costs since 2001, which has significantly dampened demand in the past year.
Those dynamics are taking shape against a backdrop of a weakened U.S. economy that is poised to enter a slowdown in the first half of next year, Fannie Mae economists predict. The Fed raised interest rates sharply last year to curb inflation, a move experts have warned against.
A recession creates problems for the overall housing market. Although central banks are easing — which could push mortgage rates lower — a weak labor market and troubled credit conditions could dampen demand for housing, Fannie Mae said in an earlier note.
And the economy is already showing signs of slowing down. Optimists who say the U.S. is on track to avoid recession point to still strong consumer spending, but the current trend appears unsustainable given income, Fannie Mae said. Real personal consumption expenditures rose 0.6% in July, although real disposable personal income fell 0.2%.
Meanwhile, recent credit card transaction data and car sales data show a Undermining American consumersAuto sales fell 4.6 percent last month. When wage growth decreased, the personal savings rate also fell to 3.5% in July – this sign Consumption, which drives the US economy, is about to slow..
The updated economic statistics also show a weaker picture of the US economy than previously thought. In the last quarter, real domestic product improved to 2.1%According to the Bureau of Economic Analysis, it was 0.3 percent lower than the initial estimate.
But even if the US avoids recession next year, in 2018 The housing market can struggle “for a long time”. Fannie Mae economists have previously said that the Fed will keep interest rates high to control inflation, which will have the effect of raising loan rates. Until mortgage rates rebound significantly, housing affordability and sales are unlikely to improve, experts say. Probably around 5%..
Read the main article Business Insider
