President and CEO of the National Association of Home Builders Jerry Howard warned consumers on Friday that the housing market is currently “staring into face of perfect storm” and that this is a “bad sign” for the economy, FOXBusiness report.
“Our own Wells Fargo NAHB Housing Market Index (HMI) declined three points this month because builders are saying things are going to ‘dry up.’ You’ve got a combination of the costs…regulatory compliance and now at the other end of the pipeline, interest rates are going up,” Howard said to “Cavuto: Coast to Coast.”
In February, pending home sales fell for the fourth consecutive month, according to the housing expert. At this,, Howard said he is “very worried” that the market could “really slow down.”
Howard spoke of consumers walking away from housing contracts even before signing them. This has been a national issue.
“What builders are doing to avoid that…is they’re putting escalator clauses into their contracts,” he said.
“[Customers] come in and say, ‘You want to build a house?’ I’ll tell you how much I think it’s going to cost, but I’ll also say ‘I can’t be held to that. You’re going to be liable if it goes up,’” Howard stressed.
Zillow reports that home prices are growing faster than what people make in an entire year, projecting a 22% increase year-over-year in May.
In the meantime, the Fed’s recent rate hike has resulted in higher borrowing costs meanwhile home prices are already at historic highs as well.
“I am very, very concerned that we’re going to see the housing markets slow down dramatically, which is a bad sign for the consumers, and it’s an equally bad sign for the American economy. We’re very worried right now,” Howard said.