THE BASIS POINT

Debt Ceiling Default Shock: Mortgage rates 8.4%, Unemployment 8.3%, Home Sales down 23% (CHARTS)

 
 

Jeff Tucker and the Zillow economics team have a chart set that models what would happen to the housing economy if the U.S. defaults on its debt. Zillow says that in a default scenario:

– Mortgage rates could rise to 8.4%. Rates today are about 6.5%.

– Unemployment could rise to 8.3%. Unemployment today is 3.4%.

– Existing home sales could drip 24%. Existing home sales today are tracking at 4.4m sales for 2023.

– Home values could drop 1-5%. Home values are down 2% from a year ago as markets come off pandemic highs.

Select charts are here, and full post is below.

Zillow says unempoloyment would rise to 8.3% in a U.S. default scenario - The Basis Point

Zillow says existing home sales would fall 24% in a U.S. default scenario - The Basis Point

Zillow says home values would fall 1-5% in a U.S. default scenario - The Basis Point

U.S. debt default unlikely but Zillow scenarios show housing shock if it does happen. Here are charts from Zillow economics team.

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Check It Out:

A debt ceiling default would send the U.S. housing market back into a deep freeze

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