Powell: Don’t Expect Rate Cuts To Rescue the Housing Market

FOX Business and Quartz contributed to this report.

Federal Reserve Chair Jerome Powell threw some cold water on hopes for a quick housing rebound, saying the central bank’s latest interest rate cut isn’t likely to fix the sector’s biggest problems: low supply and sky-high prices.

Speaking to reporters Wednesday after the Fed cut its benchmark rate by another 25 basis points — the third straight cut this year — Powell didn’t sugarcoat the situation.

“Activity in the housing sector remains weak,” he said, before adding that a small drop in rates probably won’t change much for frustrated buyers.

“The housing market faces some really significant challenges. And I don’t know that a 25-basis-point decline in the federal funds rate is going to make much of a difference for people,” Powell said.

Powell pointed to the real culprit: a deep, long-running shortage of homes.

Housing supply is still tight, and millions of homeowners are locked into ultra-cheap mortgages they refinanced during the pandemic. That makes moving — and giving up a 3% rate — painfully expensive, which keeps inventory off the market.

“Housing supply is low,” Powell said. “We haven’t built enough housing in the country for a long time, and a lot of estimates suggest that we just need more housing of different kinds.”

In other words, the Fed can move borrowing costs up and down, but it can’t force builders to put up more homes or convince owners to sell.

“We can raise and lower interest rates, but we don’t really have the tools to address a secular, structural housing shortage,” Powell said.

The Fed has now cut rates by a total of 75 basis points in 2025, bringing the federal funds rate down to a range of 3.5%–3.75%. But that easing hasn’t sparked a housing boom, and the Fed’s own projections suggest there may be only one more rate cut in 2026.

Meanwhile, the basic math for buyers hasn’t improved much:

• Home prices remain elevated due to low inventory.
• Mortgage rates, which follow longer-term Treasury yields more than Fed moves, are still high enough to keep monthly payments painful.

That squeeze is showing up in the data. Realtor.com reports that:

• Delistings in October were up 38% from a year earlier.
• Across 2025 so far, delistings are up about 45% compared with the same period in 2024.
• Roughly 6% of listings have been pulled off the market every month since June — the highest rate since Realtor.com started tracking in 2022.

Sellers don’t like the prices or the buyers they’re seeing. Buyers don’t like the prices or the rates. So the market just… stalls.

Powell’s message was blunt: rate cuts alone won’t magically make homes affordable. Until the US builds a lot more housing — and some locked-in owners finally decide to move — the sector is likely to stay under pressure, even with borrowing costs drifting lower.