Former Trump advisor Stephen Moore said he’s “really nervous” about the state of the housing market in the United States, as inflation runs high, home prices and mortgage rates are soaring and home builders’ confidence plunges.
“That’s a big concern of mine,” Moore said in an interview with Kitco News. “I’m really nervous about the housing market. We’ve had a red-hot housing market now for five or six years.”
Moore, who served as Donald Trump‘s senior economic advisor during his presidency, said he “prays” the U.S. is not facing a housing bubble, “because remember when that bubble burst [in 2008], the whole economy collapsed.”
“Mortgage rates were 3 percent a year and a half ago, now they’re creeping up to about 6 percent. Just that alone means that if you buy a $500,000 house and your payment on a 30-year mortgage goes up by $200,000. So it is going to pinch the housing market. I hope it doesn’t collapse it,” Moore said.
Refusing to predict how bad a pinch the housing market will feel, as he said he’s not a housing expert, Moore said he expects a slowdown in the market, as people are not going to be able to afford the purchase of a new home.
“We’ve had such a run-up in housing values, I think we are going to see a slowdown in housing purchases because people are not going to be able to afford [it].”
Moore was Trump’s pick for the Federal Reserve in 2019, but the economist then withdrew his candidacy amid a major lack of support and extensive criticism over past accusations of sexual harassment, sexist remarks, and his insufficient economic literacy and poor qualifications. Moore is known to have more expertise on fiscal policy than he does on monetary policy.
Asked about what tools could the White House use to face a potential housing bubble, Moore had little to offer in terms of solutions.
“I don’t know what they are. A big mistake was just spending so much money that we didn’t have, and you know, we have written off debts. And, by the way, the whole world has massive debts right now,” he said in the Kitco News interview.
“The debt binge is very worrisome to me,” he concluded, hinting that he blames President Joe Biden‘s administration for the current situation.
Recent data on the housing market shows that homebuilders’ confidence has dropped in July, a sentiment that could worsen the lack of stock that’s fueling in part soaring home sales.
But despite experts raising concerns over a potential housing crash, many expect the market to come to a slow grind as excessive home prices and mortgage rates push many potential purchasers out of the market.