At the annual Jackson Hole Economic Symposium, Jerome Powell signaled that the Federal Reserve is ready to start cutting short-term interest rates — exactly what the real estate industry, investors and President Donald Trump have been waiting to hear.
The Fed chairman’s speech touched off a stock market rally and sent mortgage rates downward on Friday, Aug. 22. All the major real estate stocks were significantly higher in early-afternoon trading, with many jumping 5-10% halfway through Powell’s remarks.
Mortgage News Daily pegged the 30-year fixed rate at 6.55% on Friday afternoon, down from 6.62% the day before.
The key takeaway from Powell’s speech? The central bank is now more willing to address the labor market’s weakness through rate cuts — even if inflation is still higher than the Fed’s target, according to Realtor.com Senior Economist Jake Krimmell.
What this means for real estate: A rate cut would have two significant implications for the housing market, Krimmell predicts. In the short run, 30-year fixed-rate mortgage rates should remain near current 10-month lows of around 6.5%.
And over the long term, a more balanced view of employment and inflation risks should reduce the anxiety that has kept many buyers and sellers out of the market.
“Going forward, resolving economic uncertainty will be key for restoring consumer confidence and jumpstarting the housing market this fall, and beyond,” Krimmell said.
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Author: Dave Gallagher
