despite falling mortgage rates providing some relief to potential home buyers mortgage applications fell to the lowest level since the turn of the century last week—providing fresh evidence that the housing market downturn may have room to run as some experts worry about how the collapse will damage the broader economy mortgage applications fell 23 from one week earlier according to the latest data from the mortgage bankers association pushing overall applications to the lowest level since 2000 even as rates on the popular 30year fixed mortgage slipped to a twomonth low of less than 55 in a statement mbas joel kan said home buying applications continue to suffer from rapidly drying up demand as mortgage rates remain about 2 percentage points higher than one year ago—driving up the cost of monthly mortgage payments and making homes the least affordable theyve been in 33 years falling mortgage rates helped applications tick up earlier this month giving some experts hope that demand may be set to recover but in a wednesday morning email analyst tom essaye of the sevens report wasnt so optimistic pointing out rates are still close to the highest theyve been since the great recession the housing market is rapidly cooling essaye said adding that he expects the slowdown in housing to gradually spread through the economy over the coming months hurting economic growth through the rest of the year after data on tuesday showed housing construction slowing down much more quickly than expected last month comerica bank chief economist bill adams was more bearish saying housing will likely subtract from gross domestic product growth which has already contracted two quarters in a row over the next year though he believes mortgage rates have likely already peaked this year adams notes the housing slowdown will compound difficulties in the economy and particularly bigbox retail technology firms and manufacturers historically high savings and low interest rates drove record growth in home sales and prices during the pandemic but this year has brought forth a stark turnaround after the federal reserve started raising interest rates in march on tuesday fitch ratings released a note warning that the likelihood of a severe downturn in us housing has climbed as homes have become increasingly unaffordable for most americans the firm predicts only a “moderate pullback” in the housing market but it also acknowledged housing activity could fall roughly 30 or more over a multiyear period in a worstcase scenario combined with downturns in tech big box retail manufacturing and foreign economies a bonafide recession looks more likely than not over the next year says adams the economy unexpectedly shrank for a secondconsecutive quarter in the three months ending in june according to the bureau of labor statistics in its report the government partly blamed the worsethanexpected gdp figure on declines in residential investments or home buying housing market faces growing risk of multiyear collapse as new home construction craters forbes housing market recession is here home builders slash prices as buyers cancel contracts mortgage rates rise forbes it was less affordable to buy a home in june than it’s been in 33 years forbes