The housing market is now one of the biggest drags on growth, and its collapse isn't expected to let up soon

• Fixed investment in structures was the top drag on GDP in the third quarter, Glenmede said.
• Residential investment, a measure of homebuilding, sank 26.4% as mortgage rates shot up.

The housing market was a big drag on economic growth, and analysts don't expect the tide to turn in the short term.

While the latest GDP data show the overall US economy returned to growth in the third quarter, residential investment sank 26.4%. That metric is an essential gauge of homebuilding and related activity in the housing market.

And when combined with nonresidential structures, fixed investments in those categories were the largest detractors on economic activity during the quarter, according to Michael Reynolds, vice president of investment strategy at Glenmede, who noted that activity in the sector is typically very sensitive to changes in rates.

In fact, the 30-year fixed mortgage rate has soared nearly 140 basis points to 7.16% since August, as the Federal Reserve continues its aggressive tightening campaign.

"The interest rate on new 30-year mortgages is now materially above that of the existing pool of mortgages, which tends to be a foreboding sign for housing," Reynolds said.

And according to Pantheon Macroeconomics chief economist Ian Shepherdson, falling home prices will help ease inflation metrics, but he expects the fourth quarter to see a collapse in residential investment that's similar to the one in the third quarter.

The comments add to the increasingly stark outlook for the housing market, which is coming under pressure as rising mortgage rates deter consumers from buying.

On Wednesday, Shepherdson noted that the housing market is currently operating on an unsustainable disconnect while adding that new home prices still have further to fall.