Realtors are worried that the GOP's tax plan could slump the housing market

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• The National Association of Realtors said the Tax Cuts and Jobs Act released Thursday confirmed its biggest concerns.
• The trade group is worried that a reduced cap on the mortgage interest deduction would lower home prices and hurt middle class homeowners.
• If passed, the tax act would cap the deduction for interest paid on mortgage debt at $500,000, down from $1,000,000.

The National Association of Realtors opposed the GOP's tax plan on concerns that it could hurt home prices.

The Tax Cuts and Jobs Act unveiled on Thursday would cut the mortgage interest deduction that new homeowners enjoy in half, to loans of $500,000 or less.

"Eliminating or nullifying the tax incentives for homeownership puts home values and middle class homeowners at risk, and from a cursory examination this legislation appears to do just that," William Brown, the NAR's president, said in a statement on Thursday.

Prior to the release of the act, the trade association was on "high alert" for details that could threaten the tax benefits of homeownership. It said it would comment further after a thorough reading of the bill.

The legislation has been met with backlash elsewhere in the housing market. The National Association of Homebuilders amplified its criticism of the change to the mortgage interest deduction, saying it favored wealthy Americans over the middle class.

"You're talking about potentially causing housing recessions in some of the biggest markets in the country," Jerry Howard, the NAHB's CEO, told Business Insider.

Investors sold off shares of homebuilders. The SPDR S&P Homebuilders exchange-traded fund fell 3%, its biggest decline in a year.