The housing market had already been hurting because of a lack of supply, especially at the lower to middle market. This made it difficult for first time buyers. With 30 year mortgages now moving above 5% affordability, it is even harder.

Housing has an outsized impact on the economy, some say as “it punches above it’s weight,” because of the number and variety of other industries it touches — from a broad range of jobs (plumbers, electricians, brokers, architects, lawyers) to all the material and equipment purchased, rent and what was consumed (lumber, pick-up trucks, tile, etc.

Any further slowdown in housing will ripple through the broader economy, possibly leading to a recession.

Lastly, low rates have spurred a record number of stock buybacks over the past few years. companies were able to borrow money. This was essentially done for free to use for stock repurchase plans. This shrank share count, which boosted earnings per share and helped put a floor under prices.

Without the free money, buybacks are likely to dwindle. This will leave the market vulnerable air pockets, and free falls.

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