Markets & Economy

Realtors warn lawmakers government default could spell disaster for economy, housing

NAR: Mortgage rates may go up, home prices down, if debt ceiling not raised

Congress should raise the federal debt limit in order to avoid a default that could be "disastrous" for the nation's economy and "catastrophic" for the nascent housing rebound, the National Association of Realtors said today. In testimony before the Senate Committee on Banking, Housing and Urban Affairs, NAR President Gary Thomas warned that if Congress did not raise the debt limit "in a timely manner" the result could be a severe recession that would erase the housing market's recent gains in home prices, home sales and residential construction. "(T)he momentum of the housing recovery will be in serious jeopardy if Congress is unable to move past unnecessary political brinkmanship over raising the debt limit. A default, or even the perceived threat of a default, could result in a harsh and long-lasting recession, which may be even more severe than the previous economic downturn," Thomas said. A default would likely cause U.S. Treasury rates to rise and mortgage rates alon...