According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

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Severe housing downturn 'possible' in United States, prices could fall by up to 15% Fitch (3)

According to a new report from credit ratings and research firm Fitch, the possibility of a “severe downturn” in the US housing market has increased.

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

In the event of a “more pronounced” housing downturn, Fitch analysts predict that home prices will fall 10% to 15% over the next few years, while housing activity will fall 30% or more over the same time period.

Overall, Fitch analysts said a severe downturn was “possible, but not yet probable,” citing several “key indicators” that could impact the housing market, such as U.S.

GDP growth, unemployment, consumer confidence, and home affordability. The likelihood of a severe housing downturn in the United States has increased;

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

however, our rating case scenario predicts a more moderate pullback, with a mid-single-digit decline in housing activity in 2023 and further pressure in 2024,” the agency said in a new release.

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

Sales of previously occupied homes in the United States have slowed in recent months as the Federal Reserve raises interest rates to combat rising inflation, raising mortgage rates and keeping many home buyers on the sidelines.

According to the Mortgage Bankers Association, mortgage application activity has also continued to fall, falling more than 2% this week to its lowest level since 2000.

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

According to Fortune, national home price declines are uncommon but do occur on occasion, including in the early 1980s and, most notably, in the years following the 2008 housing bubble.

However, the outlet noted that Fitch’s prediction of a 10% to 15% decline is extremely unusual.

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

“Prices of that magnitude have only been seen during the Great Depression and the Great Recession.”

If home prices fell by 15%, the Pandemic Housing Boom would be remembered as the Pandemic Housing Bubble, according to Fortune.

According to Fitch, a market crash could cause a 15% drop in US home prices, but a moderate downturn is still more likely

Yale economist Robert Shiller, who predicted the 2008 housing bubble, recently told Yahoo Finance that home prices could fall “a little more than 10% by 2024 to 2025.”

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