Economists at Bank of America Merrill Lynch are phoning it in: The largest segment of the housing market has peaked.
According to a research note released on Friday, the research team led by Bank of America Chief Economist Michelle Meyer said, “We are calling it. Existing home sales have peaked.”
According to an article from Business Insider, sales of U.S. existing homes make up 90% of all home buying transactions and bounced back faster than the new home market after the housing crash.
Now, monthly sales have failed to rise about the benchmark of 5.72 million homes reached in November of last year.
Meyer says that was probably the high-water mark.
The reason for the peak, according to Meyer? Declining affordability. Go figure.
A rising interest rate environment coupled with rapidly rising home prices are putting a chill on buyer activity.
In response, Meyer says homeowners are beginning to make more aggressive price cuts on their homes to bring in buyers, which she says has moved the housing market from a positive force on the economy to a neutral one, according to the article.
“The outcome is that the housing market is no longer a tailwind for the economy but has yet to become a headwind. Call it neutral,” Meyer said.
