Home sales could crash 23% following a US default and put the housing market in a 'deep freeze,' Zillow economist says
In the event that the US defaults, the housing market could see a sharp drop-off in home sales, according to a ThursdayIn this scenario, Zillow senior economist Jeff Tucker projects 23% fewer sales of existing homes to a seasonally adjusted annualized rate of 3.3 million in September.
"Much uncertainty surrounds these estimates, but there's little doubt that a default would be a major negative shock to housing market activity," Tucker wrote in a report titled"A debt ceiling default would send the US housing market back into a deep freeze."The so-called"X-date" when the Treasury can no longer meet its debt obligations could arrive as soon as June 1, and questions remain about the severity and duration of a potential fallout.
As a result, interest rates on mortgages would climb, with Zillow projecting a possible peak of 8.4% on 30-year-fixed rates in September. That's up from about 6.125% now.
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