Capital Economics Predicts Significant Slowdown in US Housing Market Through 2028
Capital Economics expects the US housing market to experience a structural malaise lasting several years, with annual home sales potentially reaching a record low since 2011 by 2026. The firm predicts that high mortgage rates, which are expected to remain above the 6% threshold, will continue to constrain demand and keep many prospective buyers on the sidelines. While home prices are expected to remain flat this year, the firm forecasts a modest rebound in 2027 and 2028. However, a potential 20% correction in the S&P 500 by late next year could drag down prices further if demand drops. Despite these concerns, the housing sector is expected to avoid a severe downturn as the job market remains resilient. Market data from the National Association of Realtors and Redfin further support this outlook. The National Association of Realtors reported a 2.3% drop in pending home sales in July, missing forecasts. Redfin chief economist Daryl Fairweather noted that 80% of major metros are now a buyer's market, offering opportunities for those who can afford high rates and larger down payments.