It’s a rough housing market, and Goldman Sachs expects it to get worse

Goldman Sachs expects conditions in the housing market to deteriorate further, according to the bank's latest assessment. The backdrop is already challenging: housing starts and transactions have been essentially flat for three years, with mortgage rates holding above 7%. That combination of elevated borrowing costs and stalled activity has kept both builders and buyers cautious.

The relevance extends beyond housing itself. Residential real estate is a rate-sensitive sector, and prolonged weakness can ripple through related industries—construction, materials, home furnishings and mortgage finance—while also shaping how households view their own financial position. For investors, the housing data feed into broader reads on consumer demand and economic momentum.

What to watch: the path of mortgage rates, since financing costs remain the central constraint on affordability and transaction volumes; the pace of housing starts as a signal of builder confidence; and any shift in transaction activity, which has been flat for three years. Goldman's expectation of further deterioration is a forecast, not a certainty—incoming data on rates and sales will indicate whether conditions stabilize or continue to soften.