Freddie Mac is predicting the U.S. housing sector is in the midst of the biggest slowdown in over a decade.

 WASHINGTON–In what would be a relief for home shoppers, one executive with Freddie Mac is predicting the U.S. housing sector is in the midst of the biggest slowdown in over a decade.

“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,” Len Kiefer, deputy chief economist at Freddie Mac told MarketWatch. “It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer.”

Kiefer pointed out home-purchase mortgage applications are down 40% from their most recent peak in 2021.

Purchases and refinance applications are also at their lowest level in 22 years.

‘Where Market is Headed’

Mortgage applications as a data point “gives you a sense of where the market might be headed,” Kiefer said in an interview with MarketWatch, “because that’s the early stages of when people are looking to buy a home. And if the volume of applications falls, that tends to indicate that in a month, month and a half, mortgage originations of home closings will also decline.”

Kiefer told MarketWatch home sales will “slow quite a bit over the summer.”

The forecast coincides with ongoing increases in mortgage rates, with the 30-year mortgage rate north of 5% in recent weeks.

Won’t Grind to a Halt

Kiefer stressed in the MarketWatch interview, “I don’t think that home sales are going to grind to a complete halt. They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.”