Current U.S. housing market: Recession in sight?
The U.S. housing market is showing signs of an approaching recession; property sales and purchases are showing signs of stagnation.
The U.S. housing market continues to show signs of a possible recession.
In the midst of an economic situation of growing uncertainty.
Recent indicators point to a dramatic decline in home buying conditions in the U.S. housing market, reaching levels not seen in more than four decades.
In particular, data from investment platform Game of Trades, shared in a July 5, 2024, X publication, revealed that current U.S. housing market conditions mirror economic downturns seen in 1974 and 1981, which preceded severe recessions.
“Buying conditions in the U.S. housing market have plummeted. Reaching levels seen only 2 times since 1960: 1974 and 1981. Both occasions ended in recession. The housing market is a key indicator of the economic cycle.”
Game of Trades data illustrated U.S. housing market conditions from 1960 through May 2024.
The index, adjusted +100, reflects the difference between consumers reporting favorable versus unfavorable conditions.
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This recent downturn in the U.S. housing market resembles the sharp declines of 1974 and 1981, periods marked by major economic crises and subsequent recessions.
Historically, such downturns coincide with prolonged economic contractions.
Current U.S. housing market: Recession in sight?
The substantial and rapid decline in buying conditions suggests a significant loss of consumer confidence in the housing market, often a leading indicator for broader economic trends.
Game of Trades also noted the historical sensitivity of the housing market to changes in interest rates.
The current collapse could be linked to ongoing interest rate increases aimed at curbing inflation. Higher interest rates typically lead to higher mortgage costs, reducing affordability and thus demand.
It should be recalled that Finbold reported that home valuations have reached levels last seen just prior to the previous financial crisis in 2008, raising concerns about an impending recession.
In addition to indicators in the U.S. housing market, other indicators point to a likely recession, including unemployment rates.
