The Federal Reserve’s September meeting minutes indicate growing concern over the U.S. housing market’s performance, with officials warning that current conditions could worsen if affordability challenges persist. Despite a recent quarter-point interest rate cut—the first since December 2024—housing activity remains subdued.
Policymakers noted that elevated mortgage rates and stringent lending standards continue to hinder home sales. Although the 30-year fixed mortgage rate briefly dipped to 6.215% following the rate cut, it quickly rebounded, highlighting the Fed’s limited influence over longer-term borrowing costs.
Tight credit conditions, particularly for buyers with lower credit scores, and rising delinquency rates among FHA loans underscore the stress within the housing sector. These factors contribute to the Fed’s caution, as further deterioration in the housing market could negatively impact broader economic activity.
Economists suggest that the Fed may continue to adjust interest rates to address these concerns, but the path forward remains uncertain as officials balance inflation control with economic growth.
