Shocked by rising mortgage rates, homebuyers and sellers are backing away from the market, economists say.
Americans with homes for sale are going through the five stages of grief.
“We’re in the midst of a housing resetting,” said Lisa Sturtevant, chief economist for the Bright MLS, one of the nation’s largest multiple listing services. “Sellers are definitely resetting their price expectations. Slowly. They’re going through the five stages of grief. They’re understanding that market conditions are changing. But many times, sellers are still trying to overreach on price.
While Sturtevant believes housing is going through a “resetting,” homebuilding economist Robert Dietz believes “we are in a recession right now.” He predicted that by the middle of 2023, gross domestic product will have fallen in five out of six quarters. “Buyers are seeing rates flirt with 7%, … and 7% feels scary,” Sturtevant said. “And so even people who qualify are sitting back.”
“We all remember what happened after ,” Yun said. “ huge plunge in prices. Thirty percent across the board. … We are in a similar condition in terms of affordability.” But even after rising over the past nine months, the inventory of homes for sale still is below average, keeping price drops in check, several economists said.