A fall in homebuilder confidence is driving a significant decline in the national housing market, a leading economist asserts.

Pantheon Macroeconomics chief economist Ian Shepherdson pointed to a recent National Association of Home Builders survey in which the index fell by eight points, to 38 in October, performing more poorly than expected, according to the New York Post. Below 50 represents negative homebuilder sentiment.

“The plunge in the NAHB index makes it clear that the reported jump in new home sales in September was much more noise than signal,” Shepherdson said. “In short, housing is in free fall. So far, most of the hit is in sales volumes, but prices are now falling too, and they have a long way to go.”

The outlet highlighted a rise in mortgage rates, which have more than doubled this year, nearing 7%, but noted that home prices remained on the higher side, presenting a pair of obstacles to homebuying.

“High mortgage rates approaching 7% have significantly weakened demand, particularly for first-time and first-generation prospective home buyers,” NAHB Chairman Jerry Konter said, per the Post. “This situation is unhealthy and unsustainable. Policymakers must address this worsening housing affordability crisis.”

Despite the rising interest rates and slowly declining prices, Shepherdson remains skeptical that the number of new mortgage applications would level off, saying his firm had “no faith at all that mortgage applications have stopped falling.”

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