The U.S. housing market is a major indicator of the strength of the economy. When the economy is strong and people are confident about the future, they are more inclined to buy houses, upgrade their current homes or buy larger houses.
When they are more concerned about the economy, new home construction, remodeling, median prices and housing sales are all depressed. For years, real estate was considered a reliable way to increase personal wealth because the cost of property and housing consistently increased over time.
However, the housing bubble of 2006 that led to a steep decline in housing prices was the primary cause of the Great Recession in the U.S., destroying the credit of millions of people who were suddenly underwater in their mortgages and impacting the housing market for the greater part of a decade.
Government regulations have since tightened mortgage requirements for many buyers, and they have greatly impacted the subprime mortgage industry that collapsed during the Great Recession.