A notable slowdown in the housing market reminiscent of the great financial crisis is raising alarms about its broader implications on the U.S. economy.
Moody’s Analytics housing economist, Matt Walsh, highlights a substantial decrease in home sales, likening the current state to the peak of the past financial downturn.
The National Association of Realtors (NAR) reported a 16.6% drop in existing-home sales last month compared to the previous year.
Beyond sales, housing-related consumption, tax implications, and shifting spending patterns, such as the extended savings period now required for down payments, are all indicators of potential economic strain.
The Federal Reserve’s rate hikes, aimed at countering inflation, have made home affordability elusive for many. As a result, Moody’s Analytics anticipates a 5% drop in home prices by early 2025, although the decline is considered modest compared to the steep decreases during the financial crisis.
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