Housing markets tumbling, a signal that a wider recession is coming | SummitDaily.com

Housing markets tumbling, a signal that a wider recession is coming

Consumers should prepare for price declines in home values and higher payments

Aldo Svaldi
The Denver Post
The housing market is cooling rapidly, with fewer homes being started and prices on existing homes start to drop. That weakness could signal a larger recession is on its way. In this photo, Taylor Morrison homes, foreground, under construction at Macanta Sept. 22, 2022.
Andy Cross/The Denver Post

ATLANTA — The housing market is cooling quickly in Colorado and across the country under the weight of rapidly rising interest rates, a reversal that will worsen any economic slowdown in the months ahead, several real estate experts are warning.

“Our take is that the economy is in recession,” said Robert Dietz, chief economist with the National Association of Homebuilders, during a presentation at the National Association of Real Estate Editors in Atlanta on Tuesday.

The U.S. economy shrank in the first half of the year and should grow in the third quarter, Dietz said. But that will be a false rebound, followed by three more quarters of year-over-year declines that remove any doubts a recession is underway.

Housing tends to lead the larger economy, slowing before a recession starts and rebounding before it ends, Dietz said. He doesn’t see a housing rebound until 2024, once the Federal Reserve eases monetary policy.

Rates on 30-year mortgages are now above 7% and demand for loans is falling precipitously, according to the Mortgage Bankers Association. Zillow estimates that the typical U.S. homebuyer faces a monthly payment 75% higher than was the case a year ago on the same house.

Read more on DenverPost.com.

Support Local Journalism

Support Local Journalism

As a Summit Daily News reader, you make our work possible.

Now more than ever, your financial support is critical to help us keep our communities informed. Every contribution, no matter the size, will make a difference.

Your donation will be used exclusively to support quality, local journalism.