- The US economy may avoid a recession after all. That’s not great for sidelined homebuyers.
- A recession would likely cause interest rates to fall, bringing down mortgage rates and adding housing inventory.
- High borrowing costs and elevated prices are the new normal for now, one real estate economist said.
The US will probably avoid a recession after all – and that could be bad news for buyers who are being priced out of a frustratingly unaffordable housing market, according to National Association of Realtors chief economist Lawrence Yun.
The real estate economist saw mortgage rates and home prices staying flat—which is to say, elevated—through the rest of 2023, with the the 30-year-fixed mortgage rate easing to just 6%-6.5% by year-end.
It’s not the seismic change some homebuyers are hoping for, with mortgage rates currently hovering near 7% for most of the past year. That’s partly the fault of the strong economy, Yun said, and the US averting a downturn will likely influence interest rates to stay high throughout the economy, meaning mortgage costs won’t budge much from 20-year highs.
Yun pointed to the robust labor market, with the economy adding 209,000 in June, only slightly lower than in previous months. Inflation, meanwhile, has cooled significantly from its 41-year-record last June, with prices accelerating just 3% year-per-year.
“My baseline is we don’t have a recession. We continue to crank out jobs – maybe not as strongly – but still more jobs with each passing month,” Yun told Insider.
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Source: ca.finance.yahoo.com
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