Housing Affordability Crisis Increases Odds of Recession
A prolonged sales slump in the $4 trillion industry would ripple through the economy.
The pandemic housing boom is coming to an abrupt halt. Buyers are getting priced out by mortgage rates that have almost doubled since January. Sales of new US homes fell for the fifth time this year in June to a more than two-year low. And brokers and mortgage companies have started laying off employees by the hundreds.
Unlike the exploding home price bubble that triggered the 2008 financial crisis and left millions of foreclosed properties in its wake, this is an affordability crisis. The biggest risk to the economy now is a deep and prolonged sales slump that could give the $4 trillion industry a starring role once again in the next economic recession.