Goldman Sachs(US:GS) Jin Shi Shu Ju·2025-07-15 11:21Core Viewpoint - The real estate market is sending a severe warning to the U.S. economy, with high home prices and interest rates suppressing sales and creating a challenging environment for buyers and builders [1][2]. Group 1: Economic Impact - The housing market is expected to become a significant headwind for economic growth, described as a "red signal flare" by Mark Zandi [2]. - Unless mortgage rates, currently near 7%, decrease significantly, home sales, new constructions, and prices are likely to decline sharply [2]. - The Federal Housing Finance Agency director has called for interest rate cuts, criticizing the Federal Reserve's actions as unjust [2]. Group 2: Market Conditions - The average 30-year fixed mortgage rate has reached 6.83%, leading to high monthly payments for homebuyers, such as $2,900 for a $425,000 home with a 10% down payment [2]. - Despite an increase in available listings, buyer interest remains low, with builders abandoning promotional strategies due to high costs [2]. - Many builders are delaying land purchases, indicating a rapid decline in new home sales, starts, and completions [2]. Group 3: Price Predictions - Goldman Sachs predicts that U.S. home price growth will hit a 14-year low this year, with only a 0.5% increase expected in 2025 and 1.2% in 2026, significantly lower than previous forecasts [3][5]. - The stagnation in prices, increased supply, and high interest rates are identified as the main factors affecting the market [5]. - Approximately 15% of the 381 cities surveyed by Goldman Sachs may see home prices drop by over 5% in the next two years [5].