A growing number of U.S. homebuyers believe the country will slip into a recession within a year, according to a new survey by Realtor.com.
However, a majority of those respondents are not too concerned, as they hope an economic downturn may make buying a home a little more affordable.
Why It Matters
The chances of the U.S. entering a recession this year doubled after the Trump administration imposed sweeping tariffs against the country’s trading partners. While the chances have since been revised by some analysts, they remain higher than they were at the beginning of the year.
A recession would bring some pain to everyday Americans, including growing uncertainty over their employment and the country’s future, likely depressing demand in the housing market. But after years of skyrocketing home prices and historically high mortgage rates, many are hoping that an economic downturn would cause enough of a shake-up to bring down the cost of housing.
What To Know
Of the prospective homebuyers surveyed by Realtor.com, 63.4 percent said they expected a recession in the next 12 months—the highest share since 2022, at the height of the COVID-19 pandemic.
The survey was conducted in the first quarter of 2025, after President Donald Trump‘s first waves of tariffs but before he imposed a baseline 10 percent tariff on all U.S. trading partners in April and intensified a trade war with China that has since cooled.
Of these, 29.8 percent harbored hope that an economic downturn might make buying a home a little more affordable. More than half said a recession wouldn’t change their plans to buy a property, while 15.8 percent said it would make them less likely to buy.
With a lot of back-and-forth unfolding around tariffs and continued volatility in the stock market, there is still much uncertainty around the direction the U.S. economy is headed toward. This, in turn, makes the next move of the Federal Reserve harder to predict, leaving aspiring homeowners guessing as to when, if ever, mortgage rates will finally come down.
An aerial view of single-family homes in Thousand Oaks, California, on April 18.
Kevin Carter/Getty Images
J.P. Morgan, which had raised the chance of the global economy entering a recession by the end of the year to 60 percent in April, recently lowered it to 50 percent to account for the temporary tariff reduction between Washington and Beijing. Goldman Sachs put the chance of a U.S. recession at 35 percent, lowering it from 45 percent, while Moody’s Analytics said there was a 40 percent possibility.
Experts told Newsweek that a recession would not be good for the U.S. housing market, though it might have the immediate effect of lowering home prices. The price tags on homes, they said, would only come down because fewer people would be able to afford to buy them.
“Higher unemployment would reduce the number of households that can afford a home, further weakening buyer demand,” Hannah Jones, a senior economic research analyst at Realtor.com, previously told Newsweek. “As buyer demand falls, sellers are likely to lower prices to attract remaining home shoppers in the market.”
“Economic stress among homeowners could prompt faster inventory growth that could lead to softening prices, a phenomenon we have not seen in a long time,” Danielle Hale, the chief economist at Realtor.com, previously told Newsweek.
Mortgage rates are also likely to fall, as many aspiring homebuyers hope, though they may not be in a good position to take advantage of it.
“Mortgage rates typically fall during a recession as investors lean on bonds for reliable returns versus bigger, riskier investments,” Jones said. “More demand for bonds lowers their return, and mortgage rates mirror the 10-year treasury yield, so mortgage interest rates would move lower in tandem with longer-term bond yields.”
She continued: “Additionally, the Fed has historically dropped interest rates during recessions in pursuit of low inflation and full employment. Though the drop in Fed rates most directly impacts short-term yields, the impact moves throughout the bond market and can lower longer-term yields as well.”
What People Are Saying
Jiayi Xu, an economist at Realtor.com, said in a news release: “If the economy enters a recession, the Federal Reserve may respond by lowering interest rates to stimulate activity, potentially putting downward pressure on mortgage rates and easing affordability concerns. As a result, buyers—especially those with limited down payments—might view a recession as a more favorable time to enter the market.”
Stuart Kaiser, Citigroup’s head of U.S. equity trading strategy, told Bloomberg TV last week: “It’s kind of a coin flip. Before last weekend, if I had to choose, I would have said a recession was more likely. After this weekend, I think what you’re hoping you’re going to see is that soft economic data and the survey data improve and hopefully kind of reduce those recession risks. But I agree, it’s definitely not off the table.”
Mark Zandi, the chief economist at Moody’s Analytics, wrote on X, formerly Twitter, of the April jobs report, which showed growing employment: “The April jobs report shows the economy is not in recession, despite the Q1 GDP decline. Employment increased 177k in the month, suggesting the job market remains a firewall between continued growth and a downturn. But after accounting for downward revisions to previous months, employment was up only 119k. The firewall feels fragile. Unless the trade war de-escalates in the next few weeks, the firewall will come down, and a recession will ensue.”
Michael Feroli, J.P. Morgan’s chief U.S. economist, wrote to clients earlier this month: “[The Trump] administration’s recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the U.S. economy slips into recession this year.”
What Happens Next
Higher unemployment and economic uncertainty normally make it more challenging for people to buy homes, even if they have been waiting years for prices and mortgages to drop and believe they are ready to purchase.
Experts told Newsweek that home prices won’t budge too much, as inventory remains historically low compared to demand. U.S. builders, who have said the Trump administration’s tariffs will make the cost of building new homes more expensive, are already revising their expectations for new construction projects this year.
Additionally, a recession might cause a surge in foreclosures and lenders’ losses, which in turn could transfer their added costs to customers, raising mortgage payments.