US Debt Default Could Freeze Home Buying and Spike Costs by 22%

If the US defaults on its debt, housing costs could spike by 22%, with the rate for 30-year, fixed rate mortgages rising above 8%, according to a Zillow analysis. There would be 700,000 fewer homes sold in the 18 months after July, almost 12% of the 6 million sales currently expected during that span. Interest rates would spike, peaking at 8.4%, and unemployment would surge, peaking at 8.3% from its current rate of 3.4%. However, even in this dire scenario, home values would still be expected to rise 1% from today to the end of next year, down from a current expectation of 6.5% growth over that period.