Latest news with #MarkZandi
Yahoo
21-07-2025
- Business
- Yahoo
Top economist sounds the alarm even louder on the housing market and says homebuilders are ‘giving up'
With mortgage rates remaining high and looking unlikely to drop much anytime soon, the housing market outlook is quickly deteriorating. Moody's Analytics chief economist Mark Zandi said he thinks a 'red flare' is more appropriate for housing, just weeks after he sent off a 'yellow flare.' Unless mortgage rates come down substantially, home sales, homebuilding and prices will slump, he warned. The housing market is getting so weak that it's poised to become a significant drag on overall economic growth, according to Moody's Analytics chief economist Mark Zandi. In a series of posts on X last week, he noted that he sent off a 'yellow flare' on the housing market just a few weeks ago but now thinks a 'red flare' is more appropriate as the outlook is already deteriorating. 'Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7% soon,' Zandi warned. 'That, however, seems unlikely.' Existing home sales unexpectedly rose in May, but still marked the slowest sales pace for any May since 2009, further evidence that the typically busy spring selling season has been a bust. Meanwhile, sales of new single-family homes sank 13.7% in May from the prior month, and single-family housing starts dropped 4.6% in June, with permits down as well. 'Home sales are already uber depressed, but homebuilders providing rate buydowns had been propping sales up,' Zandi said. 'They are giving up. It's simply too expensive. A big tell is that many builders are delaying their land purchases from the land banks. New home sales, starts, and completions will soon fall.' He added that home prices had also held up well, but are now going sideways and set to turn lower as near-7% mortgage rates crush demand. In fact, the latest Case-Shiller home price report showed a 0.3% monthly fall in the 20-city index in April, steeper than March's downwardly revised 0.2% dip. And the latest Housing Market Index survey from the National Association of Home Builders showed 38% of builders cut prices in July, up from 37% in June, 34% in May, and 29% in April. Putting more downward pressure on prices is increased supply. Home listings have been climbing, as even homeowners with low, pre-pandemic mortgage rates eventually need to put those properties up for sale and buy new homes at higher rates. 'Given their demographic and job situations, locked-in homeowners must move,' Zandi added. 'They can only work around these needs for so long.' Conditions are so tepid that many homeowners who listed their properties are taking them off the market after failing to find a buyer at the price they were offering. Delistings are up 35% year to date and 47% year over year in May, outpacing active listing growth of 28.4% and 31.5%, respectively, according to a report this month. For Zandi, that all adds up to bad news for the overall economy, which is already feeling strains from President Donald Trump's tariffs. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next,' he said. Analysts at Citi Research issued a similar warning in May, when they pointed out that the economist Ed Leamer, who passed away in February, famously published a paper in 2007 that said residential investment is the best leading indicator of an oncoming recession. Citi pointed to fewer permits for single-family-home construction and an increase in the effective supply of homes on the market amid weak demand. Median home prices of existing homes were also falling on a monthly basis. 'Residential fixed investment is the most interest rate sensitive sector in the economy and is now signaling that mortgage rates around 7% are too high to sustain an expansion,' Citi said. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-07-2025
- Business
- Yahoo
Top economist sounds the alarm even louder on the housing market and says homebuilders are ‘giving up'
With mortgage rates remaining high and looking unlikely to drop much anytime soon, the housing market outlook is quickly deteriorating. Moody's Analytics chief economist Mark Zandi said he thinks a 'red flare' is more appropriate for housing, just weeks after he sent off a 'yellow flare.' Unless mortgage rates come down substantially, home sales, homebuilding and prices will slump, he warned. The housing market is getting so weak that it's poised to become a significant drag on overall economic growth, according to Moody's Analytics chief economist Mark Zandi. In a series of posts on X last week, he noted that he sent off a 'yellow flare' on the housing market just a few weeks ago but now thinks a 'red flare' is more appropriate as the outlook is already deteriorating. 'Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7% soon,' Zandi warned. 'That, however, seems unlikely.' Existing home sales unexpectedly rose in May, but still marked the slowest sales pace for any May since 2009, further evidence that the typically busy spring selling season has been a bust. Meanwhile, sales of new single-family homes sank 13.7% in May from the prior month, and single-family housing starts dropped 4.6% in June, with permits down as well. 'Home sales are already uber depressed, but homebuilders providing rate buydowns had been propping sales up,' Zandi said. 'They are giving up. It's simply too expensive. A big tell is that many builders are delaying their land purchases from the land banks. New home sales, starts, and completions will soon fall.' He added that home prices had also held up well, but are now going sideways and set to turn lower as near-7% mortgage rates crush demand. In fact, the latest Case-Shiller home price report showed a 0.3% monthly fall in the 20-city index in April, steeper than March's downwardly revised 0.2% dip. And the latest Housing Market Index survey from the National Association of Home Builders showed 38% of builders cut prices in July, up from 37% in June, 34% in May, and 29% in April. Putting more downward pressure on prices is increased supply. Home listings have been climbing, as even homeowners with low, pre-pandemic mortgage rates eventually need to put those properties up for sale and buy new homes at higher rates. 'Given their demographic and job situations, locked-in homeowners must move,' Zandi added. 'They can only work around these needs for so long.' Conditions are so tepid that many homeowners who listed their properties are taking them off the market after failing to find a buyer at the price they were offering. Delistings are up 35% year to date and 47% year over year in May, outpacing active listing growth of 28.4% and 31.5%, respectively, according to a report this month. For Zandi, that all adds up to bad news for the overall economy, which is already feeling strains from President Donald Trump's tariffs. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next,' he said. Analysts at Citi Research issued a similar warning in May, when they pointed out that the economist Ed Leamer, who passed away in February, famously published a paper in 2007 that said residential investment is the best leading indicator of an oncoming recession. Citi pointed to fewer permits for single-family-home construction and an increase in the effective supply of homes on the market amid weak demand. Median home prices of existing homes were also falling on a monthly basis. 'Residential fixed investment is the most interest rate sensitive sector in the economy and is now signaling that mortgage rates around 7% are too high to sustain an expansion,' Citi said. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
19-07-2025
- Business
- Daily Mail
Warning issued to homeowners as sales plummet
A leading economist has issued a 'red flare' warning for the housing market and cautioned that it could drag down the entire economy. 'I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,' Moody's Chief Economist Mark Zandi wrote on X this week. A 'red flare' warning suggests the market is experiencing major instability and a fall is imminent. It comes as construction of new homes has slowed and sellers are being forced to reduce their prices or pull their homes off the market entirely. 'Home sales are already uber depressed,' Zandi (pictured) wrote, adding that the housing market could become an issue for the wider economy. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next,' he wrote. If the housing markets woes do tip into the wider economy it could increase recession fears in the coming months, Zandi warned. Zandi's biggest concern is persistently high mortgage rates, currently around 7 percent, which are making buying too expensive for many Americans. High rates have also locked in homeowners who have cheaper deals and cannot afford to move and refinance. 'Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7 percent soon,' Zandi wrote. Sales of new homes dropped 13.7 percent in May compared to the month before, according to Census Bureau data. Zandi said further pressure is being piled on the housing market because homebuilders are simply 'giving up' on rate buydowns - providing a lump sum up front to reduce a buyer's mortgage rate and therefore their monthly payments - as they are now 'too expensive.' The economist also pointed out that many builders are putting off making land purchases for future developments. 'New home sales, starts, and completions will soon fall' as a result, he predicted. It comes as frustrated home sellers are pulling their homes off the market because they can't get the prices they want. A softer housing market has seen delistings surge 47 percent across the country in May compared to the same time last year. Others have been forced to slash their asking prices and accept a more reasonable offer in the current uncertain market. More than 20 percent of listed homes had price reductions in June, the highest share for the month since 2016. While the price of homes across the US continues to move up, the rate at which they are climbing has slowed considerably. May saw price growth at below 2 percent for the first time in over 13 years, according to the report. 'This is a drop compared to earlier this year when home prices were growing at above 3 percent, interest rates were slipping and the forecast for the market was stronger - even while inventory remained low,' Selma Hepp previously told the Daily Mail.
Fast Company
19-07-2025
- Business
- Fast Company
Housing market ‘red flare': Moody's chief economist sees home price declines spreading
Want more housing market stories from Lance Lambert's ResiClub in your inbox? Subscribe to the ResiClub newsletter. Just weeks ago, Moody's chief economist Mark Zandi was signaling cautious optimism. In a mid-May conversation with Gunnar Branson, CEO of the Association of Foreign Investors in Real Estate (AFIRE) —a global network of international investors focused on U.S. real estate—Zandi said the economy appeared resilient and that the additional housing market softening this spring looked more like 'yellow flares' than anything more serious. That caution has since escalated: Zandi is now issuing a 'red flare.' In a July 13 post on X, Zandi warned that home sales, homebuilding, and even house prices are set to slump unless mortgage rates fall materially from their current 7% range—something he believes is unlikely. 'The housing downturn to date has been mostly about the depressed existing home sales,' Zandi told ResiClub. 'New home sales, housing completions, and house prices have held up well—that's about to change.' Existing home sales have been stuck at historic lows since the pandemic housing boom ended in mid-2022. Between early 2020 and 2022, soaring house prices and then soaring mortgage rate hikes rapidly deteriorated U.S. housing affordability. Since then, the housing sector has been in a slump, with continued job losses and slashed commissions for mortgage brokers and agents as transaction volumes receded. But now, the housing market could be headed for even more weakness. One of the clearest tells, according to Zandi, is that builders are now postponing land deliveries—a move that typically precedes a drop in construction activity and could mean fewer starts and completions in the quarters ahead. It's not surprising that homebuilders are pulling back, given that unsold inventory just hit another 15-year high. According to an analysis of U.S. Census Bureau data by ResiClub, the number of unsold completed homes hit 119,000 in May 2025—the highest it's been since July 2009, when it hit 126,000. More home price declines are likely, especially in the South and West Zandi told ResiClub that he expects national house prices to fall by a mid-single-digit percentage, from peak to trough, over the next 18 to 24 months, assuming mortgage rates remain near 7%. But not every region will be impacted equally. 'Prices will be weakest in the South and West, where affordability is lowest and there has been more construction,' he said. These regions—many of which saw home prices stretch far beyond local income levels during the pandemic— are now seeing softening demand and rising inventory. Unlike the Sun Belt, many Northeast and Midwest markets experienced less pandemic-era migration and limited new construction. With tighter inventory and fewer builder-driven price adjustments, home prices in these markets have remained more stable heading into spring 2025. Builders in metro areas like Austin, Phoenix, and Tampa, Florida, have leaned on incentives—like mortgage rate buydowns—to keep home prices elevated and maintain sales. But as those incentives become less effective or too costly, some builders are starting to cut prices outright, putting pressure on both the new and resale markets. Simply put, Zandi thinks the housing downturn is broadening. So far, the housing downturn since mid-2022 has mostly hit one side of the market: existing home sales—which remain at historically low levels due to lock-in and affordability barriers. But Zandi's warning suggests the next phase of the downturn could cut deeper, dragging down home prices in some regional markets as well as construction activity. The super-early-rate deadline for Fast Company's Most Innovative Companies Awards is Friday, July 25, at 11:59 p.m. PT. Apply today.
Daily Mail
18-07-2025
- Business
- Daily Mail
Home owners issued dire two-word warning by expert as sales fall through the floor
A leading economist has issued a 'red flare' warning for the housing market and cautioned that it could drag down the entire economy. 'I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,' Moody's Chief Economist Mark Zandi wrote on X this week. A 'red flare' warning suggests the market is experiencing major instability and a fall is imminent. It comes as construction of new homes has slowed and sellers are being forced to reduce their prices or pull their homes off the market entirely. 'Home sales are already uber depressed,' Zandi wrote, adding that the housing market could become an issue for the wider economy. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next,' he wrote. If the housing markets woes do tip into the wider economy it could increase recession fears in the coming months, Zandi warned. Zandi's biggest concern is persistently high mortgage rates, currently around 7 percent, which are making buying too expensive for many Americans. High rates have also locked in homeowners who have cheaper deals and cannot afford to move and refinance. 'Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7 percent soon,' Zandi wrote. Sales of new homes dropped 13.7 percent in May compared to the month before, according to Census Bureau data. Zandi said further pressure is being piled on the housing market because homebuilders are simply 'giving up' on rate buydowns - providing a lump sum up front to reduce a buyer's mortgage rate and therefore their monthly payments - as they are now 'too expensive.' The economist also pointed out that many builders are putting off making land purchases for future developments. 'New home sales, starts, and completions will soon fall' as a result, he predicted. It comes as frustrated home sellers are pulling their homes off the market because they can't get the prices they want. A softer housing market has seen delistings surge 47 percent across the country in May compared to the same time last year. Others have been forced to slash their asking prices and accept a more reasonable offer in the current uncertain market. More than 20 percent of listed homes had price reductions in June, the highest share for the month since 2016. While the price of homes across the US continues to move up, the rate at which they are climbing has slowed considerably. May saw price growth at below 2 percent for the first time in over 13 years, according to the report. 'This is a drop compared to earlier this year when home prices were growing at above 3 percent, interest rates were slipping and the forecast for the market was stronger - even while inventory remained low,' Selma Hepp previously told the Daily Mail. 'Now, inventory is climbing, but people are hesitant to buy. Concerns about affordability, economic outlook and elevated mortgage rates are holding buyers back. Similarly, there are now fewer cash buyers in the market indicating that the types of shoppers may be changing.'
