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Surveys show consumers and real estate professionals are increasingly anxious about the economy. But many would-be homebuyers would actually welcome a recession as an opportunity if it leads to lower prices and rates, polling shows.
The University of Michigan Index of Consumer Sentiment slipped to 50.8 in May, its second lowest reading ever, and only 23 percent of Americans surveyed by Fannie Mae in April said it was a good time to buy.
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And now a majority of Americans shopping for homes on Realtor.com (63%) expect the economy will dip into a recession within a year, according to a survey Monday from the official search portal of the National Association of Realtors.
“Confidence in the economy has clearly taken a hit amid ongoing headlines around trade, tariffs and rate uncertainty,” Realtor.com Chief Economist Danielle Hale said in a statement.
But 30 percent of would-be homebuyers visiting Realtor.com in the first three months of the year said a recession would make them at least somewhat more likely to buy — nearly twice the share (16 percent) who said they’d be less likely to buy if the economy tanks.
Danielle Hale
“Well-prepared buyers who have been waiting on the sidelines are likely motivated by personal and lifestyle needs like growing families, new jobs, or retirements and these considerations can outweigh short term economic uncertainties,” Hale said.
Elevated mortgage rates and a surge in home prices have priced many buyers out of the market, and a recession could bring relief on both fronts. That helps explain why last fall, 36 percent of Americans polled by LendingTree said they were hoping the housing market would crash in 2025.
While it’s unlikely many Americans want to relive the pain of the 2007-2009 Great Recession — in which millions of Americans lost their homes to foreclosure — a milder economic downturn could unlock inventory in markets where listings are scarce.
The mortgage lock-in effect — which makes homeowners with low rates reluctant to trade up or down because they’d have a higher rate on their new mortgage — diminishes when mortgage rates fall.
During the first week in May, demand for purchase loans picked up for the second week in a row as mortgage rates stabilized and more listings came on the market. Lenders received 18 percent more purchase mortgage applications during the week ending May 9 than had the same time a year ago, surveys by the Mortgage Bankers Association (MBA) show.
Mike Fratantoni
“Despite the economic uncertainty, the increase in home inventory means there are additional properties to buy, unlike the last two years, and this supply is supporting more transactions,” MBA Chief Economist Mike Fratantoni said of the most recent survey results.
Nationwide, there were 31 percent more homes for sale in April than there were a year ago, according to Realtor.com data. The 959,251 active for-sale listings that homebuyers had to choose from last month marked a new post-pandemic high.
What loan originators are seeing
Most mortgage loan originators (63 percent) are also expecting a recession, and 57 percent think a recession would cause would-be homebuyers to delay their search due to uncertainty, job loss or income reductions, according to a recent survey by HomeLight.
But loan originators see a recession as a mixed bag, with slightly over half (51 percent) expecting that mortgage rates would also come down, leading to more homebuying and refinancing.
Source: HomeLight Lender Insights and Predictions survey, Q2 2025.
HomeLight’s Q2 2025 Lender Insights and Predictions survey, which was fielded between April 17 and 26, showed that loan originators expect that a recession would lead homebuyers to seek better deals and demand more seller concessions — and also have a harder time qualifying for a loan.
Source: HomeLight Lender Insights and Predictions survey, Q2 2025.
Seeing buyers struggling to qualify due to high debt-to-income ratios is already the second biggest frustration of loan originators, topped only by closings being derailed by elevated mortgage rates, HomeLight’s survey found.
Source: HomeLight Lender Insights and Predictions survey, Q2 2025.
One in five loan originators (21 percent) said seller concessions are rising as a “surprising trend in the mortgage market” to help buyers qualify, and 15 percent said there’s more demand for down payment assistance programs.
Source: HomeLight Lender Insights and Predictions survey, Q2 2025.
Only 9 percent of loan officers surveyed by HomeLight say more deals are falling apart before closing, but that trend is on the rise.
Home inspections are the main reason deals fall apart, 37 percent of loan originators said, followed by buyers getting cold feet over mortgage rates (15 percent) or seeing their financing fall through (14 percent).
Michelle Jacinto
“Buyer commitment is wishy-washy,” Michelle Jacinto, a branch manager at Direct Mortgage Loans LLC in Indiana, told HomeLight. “Any slight challenge, and they want to cancel. Anything from payments, cash to close, inspection items, or timeline changes.”
Devon Rowe, a mortgage advisor with Advantage Mortgage in Woodland, Washington, said buyers get nervous and news scares them.
A home inspection can “serve as a reason to back out of the contract, even when sellers are willing to do the repairs,” Rowe told HomeLight.
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