The US housing market is in a double-dip recession, Moody’s Analytics chief economist Mark Zandi told CNBC Monday.
“Tomorrow we are going to get an existing home sales number that that I think is going to be very, very weak, closer to 4 million units, which I think would be a new low in this cycle,” said Zandi, who is also the author of forthcoming Paying the Price.
“We probably, almost assuredly, will experience more house price declines. By those two criteria, I think that would qualify as a double dip.”
Home prices fell 5.1 percent in June to an annualized pace of 5.37 million homes, the weakest since March.
Zandi said the housing situation can’t really improve, in spite of the millions spent by the government, until more people have jobs. He also said that homeowners whose mortgages are guaranteed by Fannie Mae and Freddie Mac need help.
“There are millions of homeowners with Fannie and Freddie loans that are having trouble refinancing these very low rates, and they are paying on their loans and they are have a job, but they are underwater, or their credit score has been a little bit impaired,” said Zandi.
“Under current rules, they can’t capitalize the transaction costs into the mortgage balance and they don’t feel comfortable to do that. I think there may be a creative way to facilitate that process. And I think that that would be helpful to forestall further foreclosures and actually put some cash into people’s pockets at a critical time.”