According to Goldman Sachs, the housing market will hamper economic growth later this year. Jan Hatzius, the chief economist at Goldman, told his client in a note on Sunday. Affordable prices and lower immigration are one important source of weaknesses in the housing market, he said. “Housing investment is likely to continue to be the biggest drug for growth,” Hatzius wrote. Hatzius said multi-family home construction is likely to continue operating at a level that has fallen until December. At the same time, he said the number of new single family homes being launched will be contracted. The economists pointed to two important overhangs in the housing market. The slowdown in immigration is likely to limit household formations in President Donald Trump amid crackdowns at illegal border crossings after returning to the White House earlier this year. Hatzius also cited the growing popularity of mortgage acquisitions when home buyers buy “mortgage points” and lower the rate as evidence of affordable prices issues. Furthermore, according to Hatzius, a slowdown in the labor market will further undermine the housing trend. Friday’s non-farm salary report shows that there is less such employment activity, with data from July below expectations, with May and June totals sharply lower than initial reports.
