A year of steady mortgage rate hikes has dampened buyer demand and led to a record-breaking decline in sales transactions, but experts say the market may be bottoming out. Supply is at multi-decade lows, and affordability remains a critical challenge for homebuyers, but rather than posting new declines, those measurements are flattening, Insider reports.
Investment bank Morgan Stanley forecast a 4% price decline for homes this year, and so far that estimate has been accurate, but a lack of for-sale inventory will ensure a market slowdown without sending prices into free fall. A soft landing for the housing market translates to a stable slowdown for the broader economy as well.
And as goes housing, so goes the business cycle, Morgan Stanley said, alluding to the idea that if the housing market is in the process of bottoming, that should help the broader economy avoid a hard landing scenario that would include a painful recession.
"As other parts of the economy are slowing, a cycle bottom in housing provides an important cushion to our soft landing thesis," [Ellen] Zenter concluded.