The Fed Is Too Late to Save the Housing Market This Year
A decline in mortgage rates at the tail end of buying season is unlikely to meaningfully boost transactions or industries that depend on them.
Buying season is drawing to a close.
Photographer: Ty Wright/Bloomberg
The recent decline in mortgage rates on stronger evidence that the Federal Reserve is poised to ease policy has fueled hopes of better times ahead for companies tied to the housing market. That’s likely true, but the evidence of the past few weeks suggests it’s already too late for a revival this year.
Home loan rates at around 6.5%, down half a percentage point over the past month, point to a rebound in spring 2025 from what’s been a dismal buying season so far if borrowing costs hold here or decline further. But the potential near-term boost will be modest.
Families tend to buy houses and move in line with the school calendar — spring and summer are the busiest time with the market beginning to go into hibernation in the fall. There is little indication that this year will be very different despite what’s happening with rates. A rebound in transactions and the knock-on uptick in demand for everything from building materials to home furnishings will probably be a 2025 story. This is an important consideration for the Fed as it weighs how quickly it wants to take policy rates lower to support the labor market without reigniting inflation.