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Federal Reserve Chair Jerome Powell warned that the housing sector’s struggles are likely to continue with interest rate cuts unlikely to move the needle significantly to address challenges with inventory and affordability.
Powell spoke at a press conference Wednesday after Fed policymakers moved to cut the benchmark federal funds rate by 25 basis points for the third consecutive meeting. In his opening remarks, the chairman noted that “activity in the housing sector remains weak.”
During the question-and-answer portion of the press conference, Powell was asked specifically 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.
FED CUTS INTEREST RATES FOR THIRD STRAIGHT TIME AMID UNCERTAINTY OVER LABOR MARKET, INFLATION
Federal Reserve Chairman Jerome Powell said the housing sector’s struggles are likely to continue despite interest rate cuts. (Chip Somodevilla/Getty Images)
“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 also said that the main factors straining the housing market are a lack of supply, which isn’t something that the Fed can directly influence through 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.
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High housing prices, low inventory and elevated mortgage rates have caused weakness in the housing sector. (Loren Elliott/Bloomberg via Getty Images)
“Housing is going to be a problem and really, the tools to address it – we can raise and lower interest rates, but we don’t really have the tools to address, you know, a secular housing shortage, a structural housing shortage,” he added.
Though the Fed cut interest rates at its last three policy meetings of 2025, the 75 basis points of reductions haven’t spurred the housing market to date – and further rate cuts heading into the new year are in doubt.
Members of the Fed’s monetary policy panel released a summary of economic projections, commonly known as the “dot plot,” which forecasted just one rate cut in 2026.
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Powell said the lack of home construction over the years has contributed to the sector’s affordability challenges. (David Paul Morris/Bloomberg/Getty Images)
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, have also contributed to the affordability challenges facing prospective buyers.
Those dynamics have led to an influx of delistings by sellers, with Realtor.com’s latest monthly housing trends report finding that delistings in October were up 38% compared with the same month last year. Additionally, delistings over the course of 2025 to date are up about 45% from the same period in 2024, the report found.
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Roughly 6% of listings since June have been removed from the market by their sellers each month, which has sealed 2025 as the year with the highest delisting rate since the outlet began tracking in 2022.