Goldman economist Ronnie Walker has some bad news for prospective homebuyers: while the housing market appears soft but broadly stabilizing, affordability pressures are unlikely to abate anytime soon.
Walker expects mortgage rates to remain elevated through next year, while national home prices are still forecasted to rise modestly. That means buyers waiting for a price correction or lower rates may be disappointed, as the market remains locked in an ultra-low-turnover environment where high borrowing costs, limited affordability, and sticky prices keep many folks on the sidelines.
"We expect housing demand to remain tepid," Walker wrote in the note. He pointed out that the 30-year fixed mortgage rate is likely to fall marginally to 6.43% by year's end and hover around 6.3% for 2027.
Here's more context from Walker about the US housing market and his mid-year outlook into next year:
Residential investment faltered in the first half of the year on the back of particularly poor weather and a sharp rebound in mortgage rates: after declining 8% annualized in Q1, residential fixed investment fell 5% annualized in Q2, we estimate. In this Analyst, we review our key forecasts for the housing market for the rest of the year.
No Keys for Golden Handcuffs
The outlook for the economy's most interest rate sensitive sector is largely a function of the outlook for mortgage rates. Exhibit 2 shows that mortgage rates rebounded in March in response to the Iran War, higher oil prices, and the prospect of Fed hikes. Our strategists expect mortgage rates to remain elevated for the foreseeable future, remaining around current levels (6.43%) thr
