On Tuesday, researchers at Goldman Sachs released a paper titled “The Housing Downturn: Further to Fall.” The investment bank now forecasts that activity in the U.S. housing market will end 2022 down across the board. The firm projects sharp declines this year in new home sales (22% drop), existing home sales (17% drop), and housing GDP (8.9% drop). And don’t expect relief in 2023. Goldman Sachs projects further declines next year in new home sales (another 8% drop), existing home sales (another 14% drop), and housing GDP (another 9.2% drop).
Home prices continue to soar to new heights, and we continue to see a decoupling from fundamentals. We’ve been saying this for more than a year now. Critics of a bubble theory say, “Just because home prices are rising doesn’t mean that we are in a bubble.” Fair enough. I understand the economics here – and so do my readers.