There have been several reports in the last year of potential home buyers being priced out of a cutthroat housing market. The general consensus is that home prices won’t be cooling off anytime soon. But there appears to be another warning sign beneath the high-inflationary rubble — and it has to do with total home sales going forward.

‘Substantial Downshift in Activity’

According to Fortune, Ian Shepherdson, chief economist and founder of research consulting firm Pantheon Macroeconomics, is now forecasting existing home sales will fall a whopping 25 percent between February and fall.

“The housing market is in the early stages of a substantial downshift in activity, which will trigger a steep decline in the rate of increase of home prices, starting perhaps as soon as the spring,” Shepherdson wrote in a report. Shepherdson tapped into data from the Mortgage Bankers Association that revealed an 8 percent decline in loan applications.

Furthermore, the average monthly mortgage payment has surged by more than $400 per month. That could help further drive a market slowdown, Shepherdson contended.

“A sustained drop in home sales — new-home sales will fall too — would be a direct drag on GDP growth, at the margin, via downward pressure on residential investment, and all the services — legal, removals, and others — directly tied to sales volumes,” he wrote. “It would also depress retail spending on building materials, appliances, and household electronics.”

Home Price Acceleration

This bleak outlook comes on the heels of a new report from Zillow that claimed that there is no quick slowdown expected in home price acceleration across the country.

“Annual home value growth is likely to continue accelerating through the spring, peaking at 22 percent in May, before gradually slowing through February 2023,” the company’s researchers wrote.

“Monthly home value growth is also expected to continue accelerating in coming months, rising to 1.8 percent in March and 2 percent in both April and May before slowing somewhat. … The robust long-term outlook is driven by our expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes,” they continued, adding that by the end of February 2023, the typical U.S. home is expected to be worth nearly $400,000.

Zillow previously reported that last year’s home value growth exceeded the median salaries in twenty-five of thirty-eight major metros.

“2021 was a year of haves and have-nots, and the chasm between the two widening throughout,” the researchers noted. “Those who owned a home saw their household wealth increase dramatically. But many renters witnessed that dream either soar out of reach or had to drastically adjust their expectations and plans.”

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.