The current deceleration of the housing market given declining demand is likely to continue, Freddie Mac said. In a new Quarterly Forecast, the company’s Chief Economist points to mortgage rates that have more than doubled in the last year as the key driver.
“Mortgage rates have increased at the fastest rate in four decades, quickly taking the wind out of the sails of the housing market,” said Sam Khater, Freddie Mac’s Chief Economist. “Caused by stubbornly high inflation and higher mortgage spreads, the rise in rates has created affordability challenges that have forestalled many consumers’ decision to buy a house.”
Khater continued, “As housing market activity continues to contract, we expect a gradual increase in the supply of homes available for-sale, as compared to historically low levels last year. The combination of much lower demand and higher supply will cause home prices to decrease during the next year.”
Specific findings include: