David Rosenberg Warns US Housing Market Is Cracking

Economist David Rosenberg warns that the United States housing market is showing signs of cracking, citing a decline in the annual rate of home sales that mirrors conditions preceding the 2008 financial crisis. Data from the National Association of Realtors shows the annualized pace of existing home sales fell nearly 2% to 4.06 million in July, a figure lower than the 4.89 million recorded in January 2008.

Rosenberg attributes the current stagnation to high mortgage rates and a lock-in effect, where homeowners with low pandemic-era rates refuse to sell. Although the median sale price for existing homes rose 2% year-over-year in July, he argues that rising inventory and slumping demand in specific areas could trigger a decline in home prices.

He warns that a drop in home values would diminish the wealth effect, leading consumers to reduce spending and potentially causing broader economic weakness. Rosenberg notes that while the AI boom has so far prevented a wider recession, the housing market's instability remains a significant risk.