“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,” wrote Ian Shepherdson, chief economist and founder of Pantheon Macroeconomics.
The popular spring home-buying season is just ramping up. But one analyst is warning that it could be a bust.
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.
“That’s a huge increase, even for households sitting on savings accumulated during the pandemic—a one-time increase in savings can’t finance an increase in mortgage payments for the next 30 years—and it will push demand down a good deal further,” he wrote.
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