A growing number of indicators show that the housing-market slowdown is starting to look more like the 2008 crash than many originally expected
The cooling market is also leading buyers to try to cancel their contracts at heightened rates. Redfin data shows cancellation rates at the highest they've been since 2017, save for 2020.Dwindling sentiment is also being reflected among homebuilders in the National Association of Homebuilders/Wells Fargo Housing Market Index , which has fallen sharply in recent months.
The biggest is the change in lending practices. In the mid-2000s, mortgage lending standards were much looser and things like income levels mattered less to qualify for loans. Today that's not the case. Mortgage Bankers Association Further, around 40% of mortgages then were adjustable-rate, meaning shifting interest rates made mortgage payments unaffordable. Less than 1% of mortgages are adjustable-rate today, according to UBS.
"The declining rate of new home sales is driven by higher borrowing costs, elevated building costs, and a slowdown in real wages," said Jeffrey Roach, Chief Economist for LPL Financial, in a memo on Tuesday."Although in a down trend, the residential real estate market today should not be compared to the great financial crisis when credit markets were fundamentally at risk.
Home prices have started to fall in some markets around the US. But they have yet to decline nationally, according to the S&P/Case-Shiller U.S. National Home Price Index. Some experts, like Torres, Pantheon Macroeconomics' Ian Shepherdson, and the American Enterprise Institute's Desmond Lachman, are
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