The Probability of a Recession Declined in November as Housing Indicators Increase

The November BuildFax Housing Health Report (BHHR) revealed a substantial increase in year-over-year single-family housing authorizations at 7.09% after the indicator declined for much of 2019. Additionally, after reaching a peak in September, the probability of a recession is now declining again.

Maintenance and remodeling activity also increased this month. This could have been propelled by the rise in home buyer sentiment. As more people buy or sell properties, there’s a resulting increase in maintenance and remodeling activity.

New and Existing Housing Supply

Repeat increases across major housing indices, including single-family housing authorizations, maintenance, and remodeling, suggest housing activity might be stabilizing heading into 2020.

New and Existing Housing Supply Activity, November 2019

  • Single-family housing authorizations increased 7.09% year over year.
  • Existing housing maintenance volume increased 7.26% year over year.
  • Existing housing remodel volume increased 4.60% year over year. 

The Probability of a Recession Peaked in September amid a Tumultuous 2019

Over the past year, conversation about the likelihood of a recession has resurfaced, building even more steam in recent months. As a result, BuildFax conducted an analysis of the likelihood of an economic recession given the high correlation between declines in single-family housing authorizations and historical recessions from 1961 to 2008.

This analysis revealed that the probability of a recession increased 13 percentage points year to date, reaching 42% in November. The is in line with the BuildFax December 2018 forecast. This probability is expected to decline even further by the end of the fourth quarter so long as economic conditions remain favorable.

Download the full report for an analysis of how housing activity affects United States economy.