Could the Recession Shift Housing Sales? What to Know
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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Rising concerns over a possible recession have prompted many Americans to question how such an economic downturn could reshape the U.S. housing market.
A new Realtor.com report found that nearly 30 percent of prospective homebuyers believe a recession could make them more likely to purchase a property.
Experts have noted that recessions have historically led to shifts in housing sales, prices, and mortgage rates. Whether these changes benefit buyers or strain current homeowners remains to be seen.
Why It Matters
A potential 2025 recession could impact Americans facing inflation, leading to volatile interest rates and widespread economic uncertainty.
A recession has the potential to lower home prices and mortgage rates, offering discounted buying opportunities. However, broad economic impacts could challenge financial stability for homeowners and reshape the real estate landscape.
Understanding who stands to gain or lose—and why—could help buyers, sellers, and policymakers navigate upcoming changes in the U.S. housing market.
What To Know
Past recessions have generally led to reduced demand in the housing sector, slowing sales and, in several cases, causing prices to dip.
During downturns, consumer confidence declines, leading to fewer major purchases. Sellers may respond by lowering expectations, potentially giving buyers more negotiating power.
A For Sale sign outside a multimillion dollar residential home in Reno, Nevada, on May 6, 2024.
A For Sale sign outside a multimillion dollar residential home in Reno, Nevada, on May 6, 2024.
ROBYN BECK/AFP via Getty Images
Danielle Hale, chief economist at Realtor.com, previously told Newsweek the market's reaction varies; while the 2020 recession saw a quick rebound, the 2007–2009 financial crisis led to steep price drops and a lengthy recovery.
She said that if a recession emerges in 2025, existing home sales might not fall much further, but greater financial challenges for homeowners could increase supply and soften prices.
Potential for Buyer Incentives Amid Falling Mortgage Rates
In response to economic slowdowns, the Federal Reserve typically lowers interest rates to stimulate economic activity, which often results in decreased mortgage rates. This can make home loans more affordable, increasing buyers' purchasing power.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, previously told Newsweek that mortgage rates generally decline during recessions, noting that the rate of decline hinges on the severity of the downturn.
Survey: Buyers See Opportunity in a Recession
The Realtor.com site visitor survey from the first quarter of 2025 found nearly 30 percent of surveyed homebuyers said a recession would make them more likely to purchase a home. Lower prices and more flexible sellers appear to be key factors driving this sentiment, according to the survey's findings.
Whether the U.S. will enter a recession in 2025 remains a matter of debate. Some economic indicators, such as slowing retail sales and policy uncertainty—including impacts from tariffs—suggest a possible downturn, while other measures indicate ongoing resilience.
The national median sale price for a home reached $438,357 in April, according to Redfin data. However, regions such as West Virginia, Ohio, and Michigan continue to offer lower median home prices, with West Virginia at $249,000 as of December 2024, according to Realtor.com.
This contrast presents options for buyers seeking affordability versus those facing higher costs in other states.
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Some buyers could be associating a recession with opportunity, as prior recessions have produced declining home prices. However, it's difficult to say if a potential one in this economic environment would produce some of the dramatic declines we've seen in the past.
"Inventory remains low in some locations, and with prices and interest rates hovering around all-time highs, there's not as much incentive to sell and relocate unless you have to. The unfortunate reality is while you may see some minor dips in prices, there's housing market will more than likely remain unchanged."
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "For those who believe their careers are relatively recession-proof and who have already been home shopping or waiting on the sidelines for the right time, a home purchase may feel like the right move. While the stock and interest rate markets may decline during a recession, a bright spot may appear in home buying: there may be fewer bidding wars, there may be more motivated sellers, and holding a hard asset like real estate may feel like a better place to put your money at that time."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "In a recession, we'd likely see downward pressure on home prices. As more homeowners fall behind on their mortgages, some will be forced to sell or face eviction. That brings supply back onto the market, which usually leads to declining prices."
What Happens Next
Market participants are monitoring Federal Reserve policy moves, employment data, and inflation numbers for indications of a possible 2025 recession.
"Right now there are many homebuyers with moderately strong cash positions who have been outbid by someone with deeper pockets. That bidding war may not happen during a recession, and even the playing field for everyone," Powers said.
Any sustained changes in interest rates, employment trends, or housing supply could rapidly reshape buying and selling conditions in the coming months.
"Recessions can reset overheated markets. If inflation cools and the Fed lowers interest rates, that could open the door for buyers who've been priced out," Thompson said. "Lower prices plus a potential drop in mortgage rates, even a modest one, could improve affordability."
Americans should anticipate a recession potentially in the next quarter, Thompson said, which could translate to changes in the housing market.
"The wild card is tariffs," Thompson said. "While tariffs could raise the cost of materials and construction, Trump's unpredictable trade policies have many unsure how much impact they'll really have on housing."
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