Housing Could Turn Around Weakening Economy
July 18, 2019
The longest economic expansion in the nation’s history—now approaching 10 years—may be nearing an end, writes Lawrence Yun, chief economist of the National Association of REALTORS®, in his latest column at Forbes.com. But the housing market could help turn around some sluggish economic numbers, such as business and consumer spending.
Consumer spending is slowing, despite a record number of jobs, rising wages, and plentiful wealth accumulation by homeowners and stock market investors, Yun notes. Rising tariff fights are also causing some recent hesitancy within the economy, Yun notes. He says that slower activity on international exports and imports have correlated with a slowing economy in the past.
“Real estate is the key area for future growth and a savior in the continuing economic expansion,” writes Yun. But while demand remains high, “there is a housing shortage, and hence a critical need to build more homes, especially at moderately priced points where the demand is strongest.”
Yun says that rising home sales and increased housing starts have long been associated with economic expansion. “More home sales also mean increased numbers of Americans who can participate in wealth gains,” he notes. “Consequently, consumer spending, including vehicle sales, can then turn higher."
Still, while overall economic expansion may be slowing, Yun brushes off recession fears. He believes the economy will continue to expand from the housing market. “If the housing market turns measurably higher, the economy looks to do just fine for the remainder of the year and even better next year,” he notes. “If the trade war rhetoric quiets down and a genuine trade agreement is signed allowing for even more business freedom, then expect an economic boom.”
Updated: January 22, 2021