Stagnant home sales likely to be a drag on US economy

The ongoing slump in existing home sales is quite likely to curb consumer spending in the U.S. in the not-too-distant future, economists at First American Financial warn.

With the exception of the fourth quarter of 2024, existing home sales have declined year-over-year for 15 consecutive quarters. But durable goods purchases tied to housing are still growing, noted a posting from Odeta Kushi, deputy chief economist. That activity level is not sustainable.

“The resilience may reflect a lag, with consumers continuing to spend after moving,” Kushi said. “But, if existing-home sales remain subdued, history suggests that durable goods spending will eventually slow as well.”

How housing in measured in GDP

Housing contributes to U.S. gross domestic product in two ways. The first is categorized as…