The Federal Reserve’s policy tightening has nudged the US housing market into a slump — and policymakers have yet to fully acknowledge the extent of the trouble, according to a prominent economist.
Ian Shepherdson, a chief economist at Pantheon Macroeconomics, provided a bearish outlook for homeowners after federal data showed sales of new single-family homes hit their lowest level in nearly seven years in July.
Sales fell 12.6% to a seasonally adjusted annual rate of 511,000, well below consensus expectations.
“The housing market is in much worse shape than the Fed has been willing to admit,” Shepherdson said in a note to clients. “But policymakers have made it clear that inflation is their primary objective, and housing is collateral damage.”