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Published: May 12, 2023 3 min read
Photograph of a house for sale
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If the U.S. defaults on its debt, the economic effects could be catastrophic, potentially causing the already struggling housing market to slump further.

An analysis released Thursday from the real-estate marketplace Zillow sheds light on just how damaging a potential debt default could be on the housing market. The picture is bleak. Jeff Tucker, a senior economist at Zillow, projected that home sales would plummet, mortgage rates would climb even higher, and buyer housing payments would soar by over 20%.

"Home buyers and sellers finally have been adjusting to mortgage rates over 6% this spring, but a debt default could potentially raise borrowing costs even higher and send the market into a deep freeze," Tucker said in a statement Thursday.