Stock markets are where people understand the risks involved and accept price falls from time to time. On the contrary, the housing market is different.
Interest rates are critical to the housing market since when interest rates increase, there will be an increase in consumers’ total monthly mortgage payments.
So basically, a rise in interest rates makes mortgage payments difficult for homeowners, and this will eventually decrease the demand for houses leading to prices falling.
Recessions can lead to an increase in unemployment and lower household income. In recessionary environments, home buyers and real investor investors tend to be defensive, lacking the certainty required for a significant investment like a house purchase. The lack of confidence reduces the demand in the housing market.