The housing market recession is already ending

The housing market is looking up for Donnie Evans. The Dallas-area builder can finish houses six weeks faster than he could during the pandemic, thanks to mended supply chains for materials from tiles to garage doors. There’s plenty of buyer demand for his homes, which range in price from about $250,000 to $850,000, even as the 30-year fixed mortgage rate hovers near 7 percent, more than twice what it was just 18 months ago.

“We’re not in a recession,” Evans said. “We’re in a slowdown, somewhat. But I don’t think a recession would be the correct word for it at all.”

That’s the growing message from home builders, real estate agents and economists who say last year’s housing market recession — which many feared would linger as the Federal Reserve fought to raise interest rates and crush inflation — has already turned around. Supply chains are easing up, boosting builder confidence and helping construction crews finish homes more quickly. High mortgage rates are cooling demand but not zapping it altogether. Now that the frenzied bidding wars of the pandemic are over, there are more homes available at any given time, which gives buyers some options. And after dropping in the latter half of 2022, prices are slowly stabilizing, in another shift away from the pandemic’s warped markets.

That’s good news for the overall economy, too. The housing sector — from contracting jobs to home purchases to mortgage loans — is a major driver of consumer spending and economic growth. It is also one of the industries most sensitive to interest rates, which the Fed pushed up at a historically fast clip beginning in March 2022.