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Recession Watch: Will Another Downturn Rock the Housing Market?

Sure, we've had nearly a decade of booming home sales and prices. That's because the financial factors that helped cause last decade's crash don't exist this time around. It hiked rates four times last year, when the economy was hurtling along, but this year it may do it only once, if at all. Will a recession lower home prices? "There are just more expensive homes [than affordable ones] for sale, and so the luxury market is likely to be more vulnerable to price corrections in the event of a recession," says Hale. Only about 875,00 single-family homes were built last year, according to the National Association of Home Builders. If another downturn hits, builders will likely construct even fewer homes, says Rob Dietz, chief economist of the NAHB. The pace of single-family home construction growth is already slowing down, from 9% in 2017 to about 3% in 2018. Meanwhile, inflation results in higher land, materials, and construction labor costs. “For builders, it means that demands will fall back in some markets and they will pull back," says Dietz.