US home prices could plunge 20% amid risk of ‘deep’ housing slide, Fed economist warns

Source: Fox Business — 

U.S. home prices could tumble as much as 20% as the highest mortgage rates in two decades threaten to trigger a “deep global housing slide,” according to research from the Federal Reserve Bank of Dallas.

The global housing market has become increasingly “frothy” since 2020 as a result of the pandemic boom, the Dallas Fed economists wrote in the analysis published this week. Although house-price growth has recently begun to moderate, there are still risks of a more severe decline.

The economists — Lauren Black and Enrique Martínez-García — pointed to signs of trouble detected in the U.S. and German housing markets that threaten to “pose a vulnerability to the global outlook because of the size of those nations’ economies and significant cross-border financial spillovers.”