Housing-Market Bottom Raises Hopes That US Can Avoid Recession
- Key housing indicators have rebounded in early months of 2023
- Mortgage rates have likely peaked with Fed hikes almost done
Homes in Centreville, Maryland.
Photographer: Nathan Howard/BloombergThis article is for subscribers only.
The severe contraction in the US housing market over the past year looks like it may be coming to an end, and the bottoming-out is raising hopes on Wall Street that the country could avoid a recession altogether.
That’s because historically, housing has been a critical driver of the broader business cycle. Low interest rates can boost demand for homes, which drives up prices, building activity and construction jobs. Higher prices also help support consumer spending through the so-called “wealth effect.” And when the Federal Reserve raises rates, it all tends to go in reverse.