U.S. Now in A Housing Market Recession, Will Prices Finally Plunge?

Treasury Secretary Scott Bessent didn’t mince words on CNN’s “State of the Union” this morning: the U.S. housing sector is already in recession, and the Federal Reserve’s stubborn grip on high interest rates is the main culprit.

“I think that we are in good shape, but I think that there are sectors of the economy that are in recession,” Bessent told host Jake Tapper.

“And the Fed has caused a lot of distributional problems with their policies.” He zeroed in on real estate, adding that sky-high mortgage rates are slamming the brakes on sales and hammering lower-income buyers who carry more debt than assets.

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The numbers back him up. Pending home sales sat flat in September, according to the National Association of Realtors, and the overall market has been described by real-estate agents as “hopeless” for months.

Harvard’s 2025 State of the Nation’s Housing report pegs existing-home sales at a 30-year low, dragged down by prices, rates, insurance spikes and shrinking affordability.

Bessent’s fix? Slash rates faster. “If the Fed brings down mortgage rates, they can end this housing recession,” he said on air.

He’s not alone. Fed Governor Stephen Miran, currently on leave to chair the White House Council of Economic Advisers, warned the New York Times just yesterday that keeping policy “this tight for a long period of time” risks “monetary policy itself inducing a recession.”

Miran dissented from last week’s modest 25-basis-point cut, pushing for a full half-point instead.

Will House Prices Go Down?

So, will house prices go down? Not a crash, say the pros—just a slow exhale. Zillow’s latest forecast sees national home values finishing 2025 down 0.9% from where they started.

CoreLogic’s August data showed year-over-year prices cooling 1.3%, though pockets of the Midwest are still climbing.

Inventory sits at 7.4 months of supply—above the six-month “balanced” mark but nowhere near the 13-month glut that preceded 2008.

“Supply is gradually increasing—but the operative word is ‘gradually,’” explains Selma Hepp, chief economist at CoreLogic.

“Unless there is a significant surge in the rate of unemployment, which is currently not in the forecast, the housing market is expected to continue to rebound from 2023 lows.”

Expect Modestly Lower Prices, Not 2008 Plunge

Unemployment held steady at 4.3% in the latest read, and distressed sales remain scarce thanks to record home equity—Americans are sitting on more than $300,000 on average.

Strict underwriting has killed off the no-doc loans that fueled the last bust. “Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis,” says Rick Sharga, CEO of CJ Patrick Co.

Still, pain points linger. Late-October 30-year fixed rates hovered at 6.19%, and Hepp flags rising insurance and property-tax bills as the bigger threat to fixed-income owners. Force enough of them to list and local markets could soften fast.

Bottom line: the housing recession is real, but a 2008-style plunge isn’t in the cards. Expect modestly lower prices, a trickle of new listings as rates ease, and a market that finally starts moving again—provided the Fed listens to Bessent and hits the gas on cuts.

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