As the Federal Reserve continues to engineer the long foretold “soft landing,” housing has come into focus. Notions of a housing market crash continue to circulate the market. Now, Goldman Sachs says the real estate market may well take a turn for the worse next year. What’s going on with housing?
The housing market has been in something of a state of turmoil this year. With mortgage rates having climbed as high as nearly 6% — more than double many projections — home sales, home listings and even home construction have plummeted. In fact, average home prices fell 0.77% from June to July, the first month-over-month decrease in three years.
Many view this as a sign of an impending housing collapse. Not for nothing, housing has run a bit too hot for a bit too long. While it’s normal for home prices to rise over time, quarantine home price growth accelerated abnormally. Since the start of the pandemic, the average price of homes in the U.S. has climbed from $329,000 in Q1 2020 to $440,000 in Q2 2o22. That’s a more than 30% increase.
