Talk of a recession is everywhere, especially in the housing sector as recent data have weakened. Housing construction starts When sale formulated by higher mortgage interest rates signals a slowdown.
However, it is not necessarily the sector is in recession Like during the Great Financial Crisis. It’s more subtle than that.
Earlier this week, for example, home builders cited rising interest rates and construction costs (partly supply chain related) as culprits.caused a housing crisisRobert Dietz, chief economist for the National Association of Home Builders, said:
On Thursday, the National Association of Realtors also used the same term. “In terms of economic impact, we’re definitely in a housing recession because builders aren’t building,” said NAR’s Lawrence Yun, who said sales activity fell for the sixth straight month. , which means economic activity has slowed.
“I mean, we’re in a housing depression,” he said.
the house is still for sale
However, this does not mean that the entire housing market is in the middle of a meltdown.
Christine Cooper, US chief economist and managing director of the CoStar Group, said the homes were still for sale.
The indicators may be “tough,” but “for the most part, the market slowdown is a return to a more balanced market,” Cooper told MarketWatch.
It’s time sales slowed down, she added, especially as wages haven’t caught up.
And prices aren’t crashing or burning.
The NAR’s Yoon stressed that homeowners “absolutely have not” fallen into a recession.
“For the average consumer, the word recession conjures up miserable times. “However, homeowners continue to accumulate home equity from rising home prices.”
Buyers may be retreating, but that’s not causing a flood of homes on the market or a shortage of quality buyers.
Buyers are just feeling more uncertain about the possibility of a wider recession looming.
Jen Holland, real estate agent for ERA Key Realty in Massachusetts, told MarketWatch:
Part of it is also herd mentality. “Everyone said, ‘You should go buy a house.'”
““When people went out to look at the houses, there was a line out the door at the open house. People were like, ‘You better go buy a house.’ ‘“
Open houses are slowing now, with markets slowing, interest rates rising and talk of a recession spreading, she said. People became more anxious.
“There has definitely been a shift in buyer confidence,” Hall said.
Some of her buyers ended the sale because they felt uneasy or wanted to wait for prices and interest rates to drop. People look almost “frozen,” she said.
Hall said there were two big sales drops this week. Also, there are many buyers and they are struggling to reach the goal. “There’s so much work going on behind the scenes right now to keep people from jumping off ships,” she said.
However, given the macroeconomic backdrop, “there could be a few more months of downward overshoot before inventories rise,” Cooper said, adding that “house price gains have cooled sufficiently to keep sales on track.” will resume,” he said.
NAR’s Yun said he expected home sales to stabilize soon as interest rates stabilized, “so we could be out of the housing slump soon.”
But all this talk of a recession and cooling demand is helping some buyers.
Prospects will take this opportunity to ask for more seller.
“I got one house they gave me 37 home inspection requests,” she said. “I nearly fell off my chair. And it’s a 40-year-old house.”
Thinking about the housing market? Write to MarketWatch reporter Aarthi Swaminthan at the following address: [email protected].