Powell says rate cuts won’t make ‘much of a difference’ for struggling housing sector
Wednesday’s quarter-point rate cut by the Fed led to plenty of speculation about how the cut might affect the housing and mortgage industries.
Federal Reserve Chair Jerome Powell tempered expectations, though, warning that the housing sector’s struggles likely will continue with the rate cuts not likely to move the needle much to address challenges with inventory and affordability, Fox Business reported.
Powell said in his remarks Wednesday that “activity in the housing sector remains weak.”
Powell was asked about the housing sector’s weakness and whether the rate cuts could help improve affordability for homebuyers – particularly for younger people and first-time homebuyers.
“The housing market faces some really significant challenges. And I don’t know that, you know, a 25-basis-point decline in the federal funds rate is going to make much of a difference for people,” Powell said.
Insufficient Supply a Top Factor Facing Industry
“Housing supply is low. Many people have very, very low-rate mortgages from the pandemic period, and they kept refinancing… so it’s expensive for them to move, and we’re a ways away from that changing,” he added.
Powell added that the main factor straining the housing market is insufficient supply, which is not something that the Fed can directly influence via its monetary policy.
“We haven’t built enough housing in the country for a long time, and so a lot of estimates suggest that we just need more housing of different kinds,” Powell said.
Fox Business said the housing sector has struggled amid a shortage of inventory, which has contributed to higher prices. Elevated mortgage rates, which aren’t directly tied to the Fed’s benchmark rate, also contributed to the affordability challenges that prospective buyers are facing.
Fox said those factors have led to an influx of delistings by sellers.
Realtor.com’s latest monthly housing trends report found that delistings in October were up 38% compared with the same month last year. Also, Fpx reported that delistings over most of 2025 to date are up about 45% from the same period in 2024.
The post Powell: Rate Cuts Won’t Make Big Difference as Housing Sector Struggles first appeared on The MortgagePoint.
