22 State Economies Are In or Near Recession

22 State Economies Are In or Near Recession — What That Means for MA, NH & the U.S.

A startling new analysis from Moody’s Analytics finds that 22 U.S. states are either already in contraction or teetering on the edge of recession — a trend with ripple effects across regional and national real estate markets.

Moody’s Chief Economist Mark Zandi notes that those 22 states represent nearly one-third of U.S. GDP. Another third of states are merely treading water, and the final third is still growing, albeit unevenly. In his words: “State-level data makes it clear why the U.S. economy is on the edge of recession.”

He points particularly to regions around Washington, D.C., where federal cutbacks could hit local economies hard, but also cautions that weakness is not localized: it’s broadly spread. Southern states remain relatively resilient, although growth is decelerating. Meanwhile, New York and California, which together account for over 20 percent of national output, are key anchors in the effort to avoid a full-blown downturn.

National Trends: Job Growth, Downturn Risks & Housing Impacts

Recent macro data has stirred concern. Between May and August, the U.S. added an average of 27,000 jobs per month, according to data from the U.S. Department of Labor. And because of the ongoing government shutdown, the September report was suspended — leaving analysts and markets in the dark.

Private payroll data from ADP suggests that 32,000 jobs were lost in September, although this sample is narrower than the complete government survey.

For housing, a national recession would likely push mortgage rates lower — theoretically a tailwind for buyers — but only for those whose employment and income remain secure. If job losses multiply, demand will weaken. Realtor.com® senior economist Jake Krimmel warns:

“Whether nationwide or localized, recessions are bad for housing markets. The direct effects of an economic slowdown are higher unemployment, less hiring, and lower wages — all killers for would-be homebuyers and all warning signs for current homeowners trying to make mortgage payments.”

Krimmel also notes a second, more subtle blow from recession: rising uncertainty. Buyers delay, sellers hold off, and markets stagnate. Interestingly, he points out that the states most vulnerable in Moody’s model — many in the Northeast — are currently powering some of the strongest housing markets in the nation. Meanwhile, states flagged as “still expanding” tend to have weaker housing fundamentals (like slower price growth), which may act as a buffer against abrupt downturns.

Massachusetts in the Eye of the Storm — Or Holding Its Ground?

Massachusetts is among the states Moody’s designates as “in or at high risk” of contraction. BostonGlobe.com, but the state is not a monolithic case of weakness.

• Recent performance & outlook
  In Q2 2025, Massachusetts reported ~2.6% annualized growth in real gross state product, rebounding from a modest contraction in Q1. Federal Reserve Bank of Boston+1
  Forecasts suggest the state should grow ~2.0 % in Q3 and ~1.9 % in Q4, outpacing some depressed states but falling short of national GDP expansion. Federal Reserve Bank of Boston
  The Boston Fed and MassBenchmarks both flag tepid momentum: consumer expectations are softening, and business uncertainty looms. Federal Reserve Bank of Boston+3Federal Reserve Bank of Boston+3donahue.umass.edu+3
• Labor & employment
  Labor market conditions remain relatively healthy: unemployment is low, layoffs are not spiking, and hiring is modest — though slower than in previous years. Federal Reserve Bank of Boston+2donahue.umass.edu+2
  Still, Massachusetts faces headwinds from broader national tightening, cuts in federal research spending, and uncertainty in trade policy. One study suggests tariffs could cost the state more than $12 billion in growth and up to 79,000 jobs by 2026. Boston University
• Housing trajectory
  In real estate, predictions lean toward moderate appreciation in 2025, with many forecasts calling for 3% to 5% home price growth — a more sustainable rate than the double-digit jumps seen earlier in the decade. JVM Lending
  Strong demand in Greater Boston and high barriers to entry in many suburban markets may insulate core markets, even as peripheral areas feel pricing pressure.

In short, Massachusetts is vulnerable, but not so vulnerable that it will collapse without warning. If the national downturn is mild, housing and real estate here may decelerate — but not crash.

New Hampshire: Strong Fundamentals but Rising Affordability Stress

In New Hampshire, the housing market remains a standout in the New England region — though warning signs are gathering.

• Price and supply dynamics
  In August 2025, the median home price in New Hampshire was ~$530,300, up 5.4% year-over-year. Redfin
  Earlier in the summer, the median had peaked near $565,000 — a new state high. New Hampshire Bulletin+1
  Inventory remains historically tight, with months of supply hovering near 2 months, and new listings experiencing only modest growth. Redfin+1
  Listings dropped in many counties; in one recent report, inventory was up marginally year-over-year, but still the lowest since early 2024. NH Business Review
• Affordability and buyer profile
  A persistent gap is emerging between housing costs and incomes. The median household income in NH (~$95,628) falls far short of what would be needed to finance a median-priced home under conventional lending standards comfortably. Valley News
  Some analysts estimate that only ~15% of Granite Staters could qualify for a mortgage on the median home under traditional mortgage stress tests. Valley News
  To exacerbate matters, many transactions are being driven by out-of-state, cash-rich buyers or buyers with significant financial leverage, which limits opportunities for local, first-time buyers. NH Business Review
• Signs of cooling?
  The median price has edged back slightly in July from June’s peak, hinting at an early cooling trend. NHPR
  Days on market have risen modestly, and more homes are seeing price cuts. Some observers argue that the pace of new-home construction (especially at higher price tiers) may be too ambitious relative to local wage growth. Valley News

Even so, New Hampshire’s housing market retains robust fundamentals. Demand is strong, supply is constrained, and many buyers remain willing to pay a premium — at least for now.

What to Watch: Transmission Channels Between Economies & Real Estate

1. Employment shock
   If job losses mount — especially in sectors sensitive to interest rates (e.g., finance, tech, discretionary services) — buyer demand will stall. In MA, the white-collar industry is critical. In NH, job losses might disproportionately impact smaller local economies.
2. Credit availability & mortgage rates
   In a downturn, lenders may tighten standards. Even if mortgage rates ease, fewer buyers will qualify — especially those already on the margin.
3. Wealth effects & consumer confidence
   Home equity is a key asset for households. When prices decline or stagnate, consumer spending becomes more cautious.
4. Supply constraints & overbuilding
   In states or regions where new construction outpaces demand, a building glut could exacerbate price declines. But in places like NH, constrained land and regulatory environments may slow overbuilding.
5. Migration & capital flows
   States like Massachusetts and New Hampshire benefit from in-migration (especially from high-cost states). If that flow reverses or even slows, housing markets will feel it.

What This Means for Buyers, Sellers & Agents in MA/NH

• Buyers:
  You may enjoy slightly more negotiating room — but only if your income is secure. Don’t assume rates will fall dramatically. Focus on fundamentals: location, quality, and long-term market resilience.
• Sellers:
  Sellers in hot markets (Boston metro, Greater Concord, Lakes Region) may still fetch premium pricing. However, in marginal zones, pricing too aggressively could result in the property remaining on the market for longer periods.
• Agents & investors:
  This environment rewards local expertise and data. Be prepared to advise clients on stress-testing their budgets, understanding job risks, and assessing neighborhoods that are resilient to downturns.
• Lenders & financiers:
  Scrutiny on debt service ratios, reserves, and creditworthiness will intensify. Underwriting must be conservative.

Bottom Line

A national economic slowdown is not guaranteed, but the risk is rising. For Massachusetts and New Hampshire, the real estate outlook is mixed. Both states benefit from strong fundamentals and a desirable quality of life, but neither is immune to contagion from broader weakness.

If recession hits gently, housing markets here may decelerate gracefully. If it lands hard, the impact could be sharper — especially in markets that lack depth or a pricing cushion. For now, watch employment, lending conditions, migration trends, and affordability metrics. In the balance of opportunity and risk, local insight will be your greatest asset.

If you are considering buying, selling, or renting, or have general questions about the Boston Real Estate or New Hampshire real estate market, don’t hesitate to get in touch with me. If you are looking for local data outside these markets, I can also assist you. I can put you in touch with one of your global experts who can speak to your local market.