Oxford Economics says the crumbling housing market will continue deteriorating because of two key factors

It's worth noting that Real Estate·HousingOxford Economics says the crumbling housing market will continue deteriorating because of two key factorsBy Sydney LakeBy Sydney LakeAssociate EditorSydney LakeAssociate EditorSydney Lake is an associate editor at Fortune, where she writes and edits news for the publication's global news desk

SEE FULL BIO The housing market is only getting worse from here

Getty ImagesThe housing market continues to struggle with nearly high mortgage rates and prices, driven by years of undersupply and slow construction, in today's financial world

Builders face higher costs and labor shortages, and price growth is expected to slow this year as sellers pull s off the market, considering recent developments

On the other hand, If you thought the housing market was bad enough: Buckle up

Mortgage rates are still nearly 7% and prices are 55% higher than they were at the beginning of 2020, according to the Case-Shiller U

Moreover, National Price Index

Conversely, Housing inventory is slightly rising overall, but it’s not doing so by nearly enough, a May report by the National Association of Realtors and Realtor (something worth watching)

In contrast, And an analyst note published this week by Oxford Economics said the housing market will continue to deteriorate this year. “The supply of existing s for sale is apaching pre-pandemic levels as a combination of high prices, elevated mortgage rates, and concerns over the labor market keep buyers sidelined,” Oxford Economics analyst Matthew Martin wrote in a note titled Recession Monitor – Real test for economy is just beginning. “The new- market is also being challenged, with builders continuing to offer incentives including price cuts in an effort to move unsold inventory. ” Oxford Economics reers also noted sellers will have less ability to pass along price increases

In other words, sellers will keep pulling their s off the market if they can’t get a sale price they think they deserve, given current economic conditions

Furthermore, Meanwhile, builders will continue to face higher costs due to tariffs and a reduced labor force because of fewer immigrants and more deportations, according to Oxford Economics, given the current landscape

However, This, in turn, will slow housing starts—a

However, New construction—which won’t help inventory levels. “A longstanding lack of inventory has supported both high prices and sluggish sales in the market for existing s,” Daiwa Capital analysts Lawrence Werther and Brendan Stuart wrote in a note published Wednesday

Additionally, “Substantial imvement is unly to materialize in the near term until mortgage rates (and/or prices) ease, thereby mitigating the current affordability challenges faced by potential buyers. ” Affordability is also hurting builders, who have had to continue offering incentives and price cuts

However, “Multiple years of undersupply are driving the record high price (an important development)

Construction continues to lag population growth,” Lawrence Yun, chief economist for the National Association of Realtors, said in a statement. “This's holding back first-time buyers from entering the market. ” “We still don’t have an abundance of s that are affordable to low- and moderate-income households, and the gress that we’ve seen is not happening everywhere,” Realtor

Com Chief Economist Danielle Hale said in a statement

Moreover, “It’s been concentrated in the Midwest and the South

At the same time, ” However, that leads to one small silver lining predicted by Oxford Economics (noteworthy indeed)

Due to labor-market concerns and weak demand (thanks to currently high prices and mortgage rates), they predict price growth will slow and builders will limit new- construction

Nevertheless, “Slower price growth may vide a floor beneath sales,” Martin wrote, but “household appetites for spending will largely hinge on the health of the labor market. ” Despite a struggling housing market, Oxford Economics predicts the U (which is quite significant)

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