Home prices could start dropping this summer, marking the ‘first domino to fall’ on the way to a weaker economy, strategist says

More homes on languishing on the market without any buyers, setting up prices to start falling as soon as this summer, according to Brian Nick, senior investment strategist at Macro Institute.

In fact, the year-over-year percentage increase in unsold existing homes for sale is the highest since the Great Financial Crisis, he told Bloomberg TV on Thursday.

"That's going to put downward pressure on prices in the next three to six months," he predicted.

For now, the housing market is still in its traditional spring selling season, when Americans typically shop for homes while families try to secure a new dwelling before the start of the next school year.

By some accounts, this season is a disappointment so far as the increasing supply of homes has been met with tepid demand from buyers who are revolting against on high prices.

And when the selling season winds down in the summer and heading into the fall, Nick said home prices will start to drop and erode consumer confidence. While high prices have demoralized prospective buyers, they have buoyed sentiment among the owners of those homes along with the strong labor market.

"Once they start seeing housing prices falling—maybe the home next to them going for a little bit less than asking as opposed to what they've been seeing the last couple of years—that will dent their ability to spend and their willingness to spend as well," he warned. "The housing market is really the first domino to fall on what we think is going to be a slower growth story down the road."

Other housing market watchers have also pointed to a shift, with more buyers pushing back against the high home prices that sellers are demanding.

Compass cofounder and CEO Robert Reffkin told CNBC last month that 30% of the inventory on the market has seen a price drop, more than anytime in last decade, with supply up 16%.

“It is a different environment. We are now seeing more sellers than buyers,” he said.

But such weakness is still masked by nationwide numbers, which show home prices are rising. The most recent S&P CoreLogic Case-Shiller index showed prices were up 6.5% in March from a year earlier, hitting a fresh all-time high. Separate data from Redfin showed they rose 7.3% in April from the prior year.

For his part, the Macro Institute's Nick noted that the number of existing homes for sale is now up 8%-10% annually, suggesting that prices will soon come down.

"That supply-demand imbalance is starting to correct, which could mean you start seeing lower prices as soon as this summer," he said.

This story was originally featured on Fortune.com