Economic uncertainty is rattling consumers, but economists say that if the country goes into recession, it won’t be the real estate market’s fault. While a slowdown in housing was largely blamed for the Great Recession, economic turbulence this time around does not correlate with weakness in the real estate sector.
In fact, it’s the opposite: The housing market has gotten a boost this fall, with more robust existing-home sales and an uptick in new-home construction. Buyers are being drawn to the market by lower mortgage rates, housing analysts say. “Housing is a critical sector because it acts as a multiplier by touching a wide swath of industries, from construction to financial services to home-improvement and appliance sales,” NBC News reports.
Mortgage applications have been on the rise since interest rates have decreased in recent weeks. The lower rates are giving home buyers an average of about $50,000 more in “purchase ability,” Todd Teta, chief product officer at ATTOM Data Solutions, told NBC. “It allows people to buy more home. That is meaningful on an absolute dollar basis for a lot of buyers.”
While optimism in the housing market has been growing, the same sentiment hasn’t been shared about the economy. “Business sentiment has tanked, given the uncertain economic prospects in a world of slower global growth and unresolved trade disputes,” says Greg McBride, chief financial analyst at Bankrate.com. A consumer sentiment index by Fannie Mae shows that Americans are growing more concerned about the direction of the economy and their own financial circumstances.