A Housing Recession? It May Be Over


Housing recoveries often trail recessions, and positive signs – builder optimism, rebounding prices, more investment – suggest a corner may have been turned.

NEW YORK – A recession in the U.S. housing market could already be in the rearview mirror:

  • The National Association of Home Builders reported that its July index of industry sentiment rose to 56 in July from 55 a month earlier – up from a low of 31 recorded in December, and the highest level since June of 2022.
  • On July 19, the Commerce Department reported construction started on 1.44 million homes in June at a seasonally adjusted, annual rate, bringing the second-quarter average to 1.45 million – up from the first quarter’s 1.39 million homes started, marking the first quarterly increase since the beginning of last year.
  • The Federal Reserve Bank of Atlanta’s gross-domestic-product tracking model now estimates that residential investment grew at a 0.1% annual rate in the second quarter from the first, the first increase since the first quarter of 2021.
  • Increases in the number of new building permits suggests that growth in residential investment in the third quarter will be positive.

The result is that housing is probably providing a modest boost to GDP growth, and it looks as if it will continue to do so in the quarters ahead. That, in itself, is a strike against the possibility of the United States entering a downturn since housing recoveries usually do not start until recessions are finished.

Source: Wall Street Journal (07/20/23) Lahart, Justin

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