What a Recession Really Means for Home Prices and Mortgage Rates

Lately, the economy is making headlines, and more people are wondering: what happens to the housing market if a recession hits? Whether you’re planning to buy, sell, or just stay informed, understanding how the housing market has responded during past recessions can offer some much-needed clarity.

Let’s break it down with real data — and a little perspective.

A Recession Doesn’t Always Mean Falling Home Prices

One of the biggest misconceptions out there is that home prices will automatically crash if the economy slows. But history shows that isn’t usually the case.

📉 Only one of the last six recessions (2008) led to a sharp decline in home prices. And that downturn was fueled by a housing market crisis that doesn’t reflect today’s conditions.

📈 In fact, home prices increased in four out of the last six recessions. Even in 2020, during the pandemic-driven recession, prices rose by 6.0%.

That’s because what drives home prices isn’t just the economy — it's supply and demand. And despite some regional fluctuations, inventory remains historically low, keeping upward pressure on prices in many markets.

A Recession Does Typically Mean Lower Mortgage Rates

While home prices often stay steady or rise, mortgage rates tend to drop during a recession. Why? Because the Federal Reserve and financial markets generally respond to slowing economic activity by lowering interest rates.

💡 Over the last six recessions, mortgage rates declined every single time, sometimes significantly. For example:

• 1981: rates dropped by 5.00%

• 2008: rates dropped by 1.13%

• 2020: rates dropped by 1.00%

This matters for buyers. Lower rates mean greater affordability — or more purchasing power — even if prices don’t fall.

Bottom Line: Don’t Let Recession Fears Stop Your Plans

Recessions are part of the economic cycle — but they don’t automatically spell trouble for the housing market. History shows:

• Home prices are more likely to remain stable or rise

• Mortgage rates tend to fall, improving affordability

So if you’re thinking about making a move this year, don’t let fear of the unknown hold you back. At Waymaker Realty Advisors, we’re here to help you navigate every market — with data, experience, and your goals at the center of it all.

Your advisor. Your partner. For the best real estate journey.