America’s housing market is so far unfazed by recession

AMERICA’S HOUSING market is behaving oddly. Residential property—worth $35trn, slightly more than America’s stockmarket—seems strangely oblivious to the economic carnage around it. House prices in May were 4.3% higher than a year earlier. That rate of growth is only marginally below the average since the end of the housing crash a decade ago. Prices in even the costliest places, such as San Francisco, where the average pad sets you back $1.1m, continue to march upwards. Many economists still expect house prices to fall over the whole of 2020—but such forecasts are looking increasingly shaky.

At first glance this is surprising. House prices typically nosedive during recessions. A rising number of mortgage defaults leads to more properties being put up for sale. Falling household incomes reduce buyers’ purchasing power. In the recession of the early 1990s house prices dropped by 10% in real terms; they fell by three times that in the downturn that followed the financial crisis of 2007-09. The fall in GDP associated with the coronavirus pandemic, and the rise in unemployment, is unprecedented. Despite that, there is little sign so far that America’s housing market is about to subside.

The rate of foreclosures looks unlikely to reach the heights hit during the last recession. Housing debt, relative to incomes, is lower. The...