dChan - Q Origins Project Archive

The popular spring home-buying season is just ramping up. But one analyst is warning that it could be a bust.

Ian Shepherdson, chief economist and founder of research consulting firm Pantheon Macroeconomics, is predicting a dramatic fall in the pace of home sales this year. In a research note, he projected that existing-home sales will drop roughly 25% from the annual pace of 6.02 million set in February to a rate of 4.5 million by the end of summer.

“The housing market is in the early stages of a substantial downshift in activity, which will trigger a steep decline in the rate of increase of home prices, starting perhaps as soon as the spring,” Shepherdson wrote in a research note distributed Sunday.

As evidence of this expected slowdown in home sales, Shepherdson pointed to mortgage demand. The most recent data on mortgage applications from the Mortgage Bankers Association shows that the number of applications for loans used to purchase homes is down more than 8% compared to a year ago. Comparatively, demand for refinancing has dropped nearly 50% versus last year.

A drop in mortgage demand could predict a downturn in home sales, since most buyers rely on financing to make sure a large purchase. Issues around affordability are likely to blame for the decline. As of Thursday, the average interest rate on the 30-year fixed-rate mortgage surpassed 4% for the first time since May 2019, according to Freddie Mac FMCC, -0.45%.

https://www.marketwatch.com/story/the-housing-market-is-in-the-early-stages-of-a-substantial-downshift-home-sales-may-drop-25-by-the-end-of-summer-according-to-this-analyst-11647884229?siteid=yhoof2