Pantheon Macroeconomics on the Housing Market

– Pantheon Macroeconomics challenges the notion that the U.S. housing market has bottomed and argues that it is far from experiencing a true rebound.

– Home sales initially jumped but have fallen recently due to rising mortgage rates, and mortgage applications are expected to reach a new cycle low.

– The key obstacle to a housing market recovery is affordability, which has worsened due to last year's mortgage rate shock and the significant increase in national home prices during the pandemic.

– Pantheon Macroeconomics believes that the bulk of the drop in home prices is yet to come, with a steep and sustained decline expected.

– While some economists suggest that national home prices have bottomed, Pantheon Macroeconomics remains skeptical and attributes the homebuilder rebound to aggressive discounts and a lack of resale inventory rather than a genuine housing market recovery.

– A durable recovery in the housing market is unlikely until affordability improves, requiring lower mortgage rates, falling home prices, or both.

– Pantheon Macroeconomics emphasizes that the housing market is not in the early stages of recovery but is transitioning from a collapse in demand, sales, and construction to falling prices and housing-related consumption spending.

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