Housing Market Headed for 'Major Crash,' Billionaire CEO Warns

The CEO of private equity company Starwood Capital Group, Barry Sternlicht, has warned that the American housing market faces a major crash.

On CNBC's Squawk Box on Thursday he spoke about upcoming and ongoing issues in the economy overall and the housing market.

He said: "The Consumer Price Index, the data they are looking at is old data.

"All they have to do is call Doug McMillon at Walmart, call any of the real estate fellas and ask what is happening to our apartment rents.

Market Crash
A stock image represents a potential housing market crash. Billionaire Barry Sternlicht has said the housing market is heading for a major crash. Getty

"The economy is braking hard, CEO confidence is also miserable.

"500,000 single family home sales, new sales, is the lowest since 1952, you are going to have a major crash in the housing market."

Sternlicht also said that consumer confidence was a concern.

"Consumer confidence is terrible. Where will that show up? It will show up at Christmas," he said.

"Christmas, if you survey the consumer, half of the people will spend less this year on goods than they did last year.

"20 percent of people will spend 50 percent less than they did last year. They are doing this against piling up inventory.

"Inventory is moving rapidly higher, companies bought goods thinking the pandemic behavior would last forever."

Outside of renting, purchasing homes has become more expensive across the U.S.

House prices across the nation rose 17.7 percent in the second quarter of 2022 compared with the same period last year, according to the Federal Housing Finance Agency House Price Index (FHFA HPI) released late August.

The FHFA HPI is a collection of house price indexes that measure changes in single-family home values based on data from all 50 states and over 400 cities in America.

Compared with the first quarter of 2022, home prices went up 4.0 percent between April and June.

Skyrocketing prices and soaring mortgage interest rates have combined to make the purchase of new and existing homes unaffordable for many potential homebuyers.

The trend is reflected in the FHFA HPI for the second quarter of this year. The agency's seasonally adjusted monthly index for June was up only 0.1 percent from May.

"Housing prices grew quickly through most of the second quarter of 2022, but a deceleration has appeared in the June monthly data" said William Doerner, supervisory economist at the FHFA's Division of Research and Statistics.

"The pace of growth has subsided recently, which is consistent with other recent housing data," he said.