Data published by one eminent organization reveals that what was once considered as a red-hot market is now facing very tough times in the USA. The US housing market has plunged to the lowest in two years.

People are now showing resistance to buying homes at a great scale. Experts say high borrowing costs along with rising inflation is forcing people to avoid spending on big things. “Housing has clearly gone from tailwind to headwind for the U.S. economy,” said Bill Adams, chief economist at Comerica Bank. “It will likely subtract from real GDP growth for the next year.”

It is observed that home sale cancellations soared dramatically in July, and almost 63,000 home purchase agreements were called off. It is 15% more than the deals that collapsed in June. It is also the highest in more than two years. Dark economic outlook and risk of recession are other additional factors that are creating such a situation.

“Buyers are also skittish because they’re afraid a potential recession could cause home prices to drop,” said Heather Kruayai, a Redfin real estate agent based in Jacksonville, Florida. “They don’t want to end up in a situation where they purchase a home, and it’s worth $200,000 less in two years, so some are opting to wait in hopes of buying when prices are lower.”

Applications to build new homes slowed to an annual rate of 1.67 million units, which is also the lowest since September.