United States Enters Housing Recession | Eastern North Carolina Now | Confidence among home builders fell for the eighth consecutive month, indicating that the United States has entered a housing recession, according to a Monday release from the National Association of Home Builders.

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    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    Confidence among home builders fell for the eighth consecutive month, indicating that the United States has entered a housing recession, according to a Monday release from the National Association of Home Builders.

    The group's Housing Market Index fell by six points in August to 49, marking the first time since the spring of 2020 that the metric has fallen below the breakeven value of 50. The three components of the Housing Market Index - current sales conditions, sales expectations, and traffic of prospective buyers - all declined to their lowest levels in the past two years.

    "Ongoing growth in construction costs and high mortgage rates continue to weaken market sentiment for single-family home builders," NAHB Chairman Jerry Konter said in the release. Mortgage rates began climbing at the beginning of 2022, according to data from government-backed mortgage enterprise Freddie Mac, with 30-year fixed rates beginning at slightly over 3% in January and surging to over 5% as of Thursday.

    Single-family homes have witnessed dramatic price increases since COVID and the lockdown-induced recession. In the first quarter of 2022, the median sale price of a home in the United States was $433,100, according to data from the Department of Housing and Urban Development, marking a 34% rise from $322,600 in the second quarter of 2020. Freddie Mac forecasted last month that home prices will grow at 4% in 2023 - a relative slowdown from 17.8% in 2021 and 12.8% in 2022.

    Meanwhile, the Federal Reserve added to a series of interest rate hikes by increasing rates at a 0.75% increment for the second consecutive month. Rate hikes are meant to discourage inflation, yet they carry the unfortunate side effect of increasing borrowing costs - a reality that impacts mortgage rates and renders real estate more expensive.

    "Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession," NAHB Chief Economist Robert Dietz added. "However, as signs grow that the rate of inflation is near peaking, long-term interest rates have stabilized, which will provide some stability for the demand-side of the market in the coming months."

    The Housing Market Index survey determined that 69% of home builders point to higher interest rates as the reason for falling housing demand. Meanwhile, 19% said they have decided to reduce prices over the past month to increase sales or prevent cancellations.

    Beyond home builders, consumer confidence has declined since early 2021 amid soaring inflation and other economic bottlenecks. The University of Michigan's benchmark Survey of Consumers recently fell to a reading of 50 - indicating the lowest level of consumer optimism since 1952.

    "As higher prices become harder to avoid, consumers may feel they have no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether," Survey of Consumers Director Joanna Hsu said at the time. "The speed and intensity at which these adjustments occur will be critical for the trajectory of the economy."

    The United States met the technical definition of a recession last month as the economy shrank at a 1.5% annualized rate in the first quarter and contracted at a 0.9% pace in the second quarter. Multiple White House officials contended that the rule-of-thumb definition of a recession - two consecutive quarters of negative output growth - was insufficient to cast doubt on the state of the economy under President Joe Biden.

poll#154
Inarguably, the policies of the Democrats in congress and Joe Biden as the Executive is plunging the United States into a recession, if we are not already there; a recession that was completely avoidable. Will abrupt changes in policies occur in time?
  Yes, the Democrats have a bold plan, yet to be revealed, to save us.
  No, there will have to be a complete undoing of the damage done by these Democrats.
  I can't do simple math, so how am I to understand the concept of basic economics.
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