The housing market is recovering much faster than most other sectors in the economy in the current recession. But will it last?

Unemployment remains high—at around 13%—and economic forecasters predict unemployment likely will remain elevated for the remainder of the year. However, economists believe housing will be able to weather most of the economic storm.

The current housing shortage and homeowners’ strong equity positions will likely rescue real estate from any downturn that would be similar in scope to the 2008 financial crisis, economists said during the “Economic Outlook and Housing Trends” webinar on June 25, hosted by Freddie Mac and the Down Payment Resource.

“Real estate demand has staged a remarkable comeback, and given the chronic supply shortage, the rebound in demand should provide support to home prices,” said Sam Khater, Freddie Mac’s chief economist.

So far, data suggests the economy hit its low point during the first two weeks in April and has been steadily improving since. Still, the economy is significantly below its pre-March levels when the COVID-19 outbreak took hold in the U.S. While real estate demand declined at similar rates to the broader economy, the housing market is making a much more pronounced recovery than most other segments of the economy, Khater said.

This Isn’t the 2008 Crisis

“The housing market has held up much better than expected,” Laurie Goodman, co-director of the Housing Finance Policy Center at Urban Institute, said during the webinar. “Homeowners have been much less affected by COVID-19 than renters.”

A big reason for that is because the housing market has been underbuilding and unable to keep up with population demand since 2009, Goodman said. The country is undersupplied by an estimated 2.5 million housing units. “The supply-and-demand imbalance is continuing to put upward pressure on home prices and is causing them to rise,” Goodman added.

Further, owners have accumulated a great deal of equity in their homes over the last decade—and still-rising home prices are only adding to that. “This has given the housing market a resiliency that it didn’t have back in the 2008 financial crisis,” Goodman said.

Deferred Sales Unleashed, But for How Long?

In recent weeks, mortgage applications for home purchases have posted a strong rebound, even surpassing levels well beyond what they were a year ago. Record low mortgage rates are enticing buyers who had been waiting on the sidelines prior to the pandemic to make a move as well as motivating renters, Khater said.

“It’s remarkable that in the last recession it took us 10 years to reach normal levels” again with purchase mortgage applications, Khater said. “In this recession, it took us less than 10 weeks.”

However, Khater cautioned that mortgage applications for home purchases will likely moderate after this current “bulge in deferred sales” subsides.

“The economic recovery is underway, but uncertainty is very high,” Khater said. Federal stimulus programs will expire in the coming weeks. “Stimulus is flowing through and sustaining consumer spending and balance sheets for now, but there is concern that a fiscal cliff is just around the corner and may put the brake on recovery,” he said.

Here are some additional housing indicators highlighted at the webinar:

Home prices stand firm. Home prices are rising, but growth is expected to moderate over this year and next. However, economists are not predicting any declines in home prices. The National Association of REALTORS® is projecting home prices to be up about 4% in 2020 and 2021; CoreLogic and Freddie Mac’s forecasts are more subdued but still have home prices rising at about 2.5% in 2020 and 2021. So far, home prices have not gone down during the pandemic and actually have increased. “This really speaks to the lack of inventory on the market,” Khater said. “It’s still a seller’s market—even in the worst recession since World War II.”

Personal income is rising. Despite surging unemployment numbers, incomes are rising. Personal income increased to a record $2 trillion in April. But that rise was entirely driven by the economic stimulus from the federal government, Khater said. “Money is flowing into the economy and supporting customers, but in July there could be a fiscal cliff,” Khater says. “The concern is that that the stimulus supported consumer spending, but that could go down again when it expires.”

Foreclosure wave unlikely. Khater does not anticipate a large uptick in foreclosures in 2020 or 2021. “Homeowners have record equity, home prices continue to rise, and there’s federal forbearance support,” Khater said. “Homeowners—at least so far—seem to be much less impacted by the recession.”

Some populations are being hit harder than others. Khater pointed to data that showed Hispanics and Asian populations in the U.S. have seen the largest declines in employment during the current recession. Their declines have been four times larger than the last recession. “There are longer-term concerns around the recession’s impact on inequality,” Khater said.