The housing market outlook is grim as high mortgage rates show no signs of dropping. Moody’s Analytics chief economist Mark Zandi warns of a significant economic drag, with home sales, homebuilding, and prices set to slump unless rates decline. Existing home sales rose in May, but new single-family home sales and housing starts are down.

Zandi noted a shift from a “yellow flare” to a “red flare” for the housing market outlook. Builders are cutting prices, and delistings are on the rise as homeowners struggle to sell. With mortgage rates near 7%, demand is crushed, leading to falling home prices and increased supply.

Analysts at Citi Research issued a recession warning, citing weak demand, falling home prices, and fewer permits for single-family home construction. They emphasize the sensitivity of the residential investment sector to interest rates, signaling that rates around 7% are too high to sustain expansion. The housing market poses a significant risk to the economy’s future growth.

Read more at Yahoo Finance: Top economist sounds the alarm even louder on the housing market and says homebuilders are ‘giving up’