Housing Status

September 20, 2022
A photo of a wooden barn in a green field.

A Roof Over Your Head

The U.S. housing market directly impacts the economy. Several data points from this week paint a picture of a slowing market.
What To Know: Why It Matters
“Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating."

Chief economist, Robert Dietz, National Association of Home Builders, on how home builders feel about the market. This group recently announced a housing recession. Builder sentiment has decreased for the last nine months and sits at the lowest level since May 2020 (the beginning of the pandemic, after several weeks of stay-at-home orders that changed the market).

“The rising mortgage rate has clearly hampered the housing market."

National Association of Realtors chief economist Lawrence Yun reacting to slowing sales in the housing market. Sales of existing homes (homes already built — the largest portion of the market) fell in August from July, and remain down nearly 20% from last year at the same time. However, housing prices, while trending lower, remain higher than last year showing the slowing market hasn't necessarily led to a drop in prices.

Why Housing Matters:

  • Moving Costs: Purchasing items (big and small, a couch or a shower curtain) adds up!
  • Ripple Effects: The housing market impacts construction, manufacturing and financial sectors — painters, pipe builders, bankers!
  • "Wealth effect": When you believe your home is worth more, you may more freely spend money on unrelated items. The opposite can also happen — when the market cools, you may pull back spending. Both actions can have broad economic impact.

The Federal Reserve announced a rise in interest rates on Wednesday, increasing the cost of borrowing. This will impact how expensive it is to attain a mortgage or a home equity line of credit — both of which impact the housing market.

‘Prices ran wild the past two years’: Home builders say ‘housing recession shows no signs of abating’

New home building picked up last month, but builder sentiment remains low

U.S. Home Sales and Prices Fell in August as Mortgage Rates Rose

Introduction to U.S. Economy: Housing Market (Congressional Research Service)

by Jenna Lee,