Which statement best describes why it is difficult to sell a home during a recession?

• A. Homeowners are legally prohibited from selling their homes during a recession.
• B. Interest rates are always higher during a recession, making mortgages unaffordable.
• C. The supply of homes decreases dramatically, leaving buyers with fewer choices.
• D. Potential buyers have less income and are less willing or able to purchase homes.

Answer: (D)

Verified step by step guidance

1. Understand the economic context of a recession: during a recession, overall economic activity slows down, leading to higher unemployment and reduced income for many individuals.
2. Recognize that purchasing a home is a major financial decision that depends heavily on buyers' income and confidence in their financial stability.
3. Analyze the given options by considering how each factor affects the housing market during a recession:
4. - Legal prohibition on selling homes is generally not true; there are no laws preventing sales during recessions.
5. - Interest rates can vary during recessions; they are not always higher and often central banks lower rates to stimulate the economy.
6. - Supply of homes may not necessarily decrease dramatically; in fact, some homeowners may want to sell but find fewer buyers.
7. Conclude that the main difficulty in selling homes during a recession arises because potential buyers have less income and are less willing or able to purchase homes, reducing demand.