Slumping demand and surging mortgage rates are likely to lead to the slowest period for housing sales in 30 years, according to Goldman Sachs. With home loan rates above 8% in some areas , current homeowners are unlikely to want to move, while prospective buyers are deterred by higher prices and lack of supply, the Wall Street firm warned in a note to clients. “While the sharpest declines in housing activity and prices are now long behind us, the recent jump in mortgage rates and the prospect that they are likely to remain elevated for the foreseeable future present headwinds to the economy’s most interest rate sensitive sector,” Goldman economist Ronnie Walker wrote. The firm forecasts that existing sales will drop to 3.8 million in 2024, a decline of 6.2% from projected levels this year. If that estimate is correct, it would mark a slide of more than 40% from the buying peak in 2020. Along with that, Goldman predicts a slump in housing starts to 1.34 million, a decrease of 4% and the continuation of a trend that began in the spring of 2022. Such slides in construction often have presaged recessions in the U.S. Goldman said a pullback in multifamily starts likely will be the biggest driving factor. Lurking over all the housing market, though, has been the surge in mortgage rates that have come along with the Federal Reserve’s efforts to bring down inflation . The central bank has hiked its benchmark borrowing rate 11 times for a total of 5.25 percentage points since March 2022. Mortgage rates have risen in tandem, rocketing from around 3.8% when the Fed started tightening to more than 7.6% nationally now, according to Freddie Mac data. As a result, homeowners who locked in low rates are not of a mind to sell their properties now and buy new houses with borrowing costs so high. “We expect this ‘lock-in’ effect to push existing home sales even lower in the coming months and to limit any rebound next year,” Walker wrote. While Goldman thinks the chances of the economy entering into recession are low, Walker noted that the slowdown in sales and new construction “have meaningful implications” for gross domestic product. After a robust period in the third quarter, Goldman and most of Wall Street expects GDP growth to slow considerably.