How a housing recession could impact the economy

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Kimberly Adams (1:01)

Will the stalled housing market have spillover effects on the rest of the economy?

From Marketplace in Washington, I'm Kimberly Adams. We get the National Association of Realtors report on existing home sales for September later this morning, and another monthly decline is expected. A main reason, mortgage rates have shot through the roof under pressure from the Fed's recent interest rate hike, with more increases likely on the way. Plus, there's inflation, geopolitical tensions, and high government borrowing costs. Marketplace's Mitchell Hartman has more.

Mitchell Hartman (1:34)

Back at the beginning of September, the average 30-year fixed-rate mortgage was at 6.7 percent, according to Freddie Mac. Last week, it hit 7.4 percent. Plus, says Jeff Ostrowski at Bankrate, Home prices are high and not coming down.

Jeff Ostrowski (1:50)

People who own homes are staying put, and people who don't own homes are putting off their decision to buy. There just are very few sales happening.

Mitchell Hartman (1:59)

Ostrowski and others are calling this a housing recession.

Usually, that has a lot of spillover effects to the broader economy. But not so much this time around, says Redfin economist Daryl Fairweather, because the job market's strong and consumers are still spending, while AI and data center construction are booming.

Daryl Fairweather (2:17)

The housing market has essentially been frozen since 2023 We know the economy can survive this level of home sales, because we've been surviving it.

Mitchell Hartman (2:26)

And this slow-moving housing market isn't bad for everyone, says Misha Fisher at Zillow. Buyers who can afford today's prices and rates will do just fine.

Misha Fisher (2:36)

The good news is, because there is a silver lighting here, inventory has continued to rise, so you've got more to choose from, and you've also got less competition from other buyers. To some degree, the best time to buy a house is when nobody else is looking.

Mitchell Hartman (2:49)

And he says, there are still plenty of affordable markets, especially in the Midwest and South, in cities like Indianapolis, Cincinnati, Nashville, Dallas, Austin and San Antonio. I'm Mitchell Hartman for Marketplace.

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