After a brief four-day break, President Trump continued to publicly insult Federal Reserve Chairman Jerome Powell on Tuesday evening, criticizing him for what he calls the 'destruction of the U.S. real estate market.'
Trump wrote on Truth Social:
Can someone tell Jerome 'Too Late' Powell that he is seriously harming the real estate industry? Because of him, people cannot obtain mortgages. Inflation has not occurred, and all signs indicate that interest rates will fall significantly. 'Too Late' will be a disaster!
As this article is published, housing data continues to show weakness, and national construction confidence is low. Despite a slight increase in home starts last month, builder confidence has declined again, mortgage rates remain high, and incentives are coming out like candy.
Economists believe there has been no improvement, while Trump, now in his second term in the White House, directly blames Powell for delaying interest rate cuts, arguing that they should have been implemented long ago.
Due to persistently weak demand, home builders are significantly lowering prices.
Last month, the number of U.S. home starts increased by 5.2%, with an annualized rate of 1.43 million units. This is the highest figure in five months, primarily due to growth in multi-family housing projects. However, builders' sentiment remains low. The National Association of Home Builders/Wells Fargo Housing Market Index fell to 32 in August, the lowest level since December 2022, down from 33 in July. Economists had previously expected the index to rise to 34.
The drop in home prices reflects deep concerns about affordability and buyer hesitation. NAHB President Buddy Hughes, who builds homes in Lexington, North Carolina, said: 'Affordability remains the biggest challenge facing the housing market, and buyers are waiting for mortgage rates to fall before continuing to purchase homes.' Hughes also noted that developers have long faced issues with land regulations and other construction-related red tape.
The pandemic forced more than a third of home builders to cut prices, with an average reduction of 5%. Additionally, 66% of companies offered sales incentives, the highest level since the pandemic began. Buyers are hard to find, and interested buyers are holding back, waiting for rates to drop. Meanwhile, builders' optimism about future sales has not diminished at all, and the current sales situation is even more challenging.
Regionally, confidence in the Northeast plummeted to its lowest point since January 2023. Confidence in the South and Midwest remained stable, while the West saw only slight improvement. Despite slightly higher foot traffic compared to May, overall sentiment remains weak.
Mortgage rates have slightly decreased, but Powell is under increasing pressure.
Last week, the 30-year fixed mortgage rate fell to 6.58%. This is the lowest level since last October, nearly half a percentage point lower than at the beginning of the year. But this decline is not enough to change the market. Buyers are still holding back, and builders are still losing money.
Robert Dietz, chief economist at the National Association of Home Builders (NAHB), stated: 'Given the slowdown in the housing market and other recent economic data, the Federal Reserve's Monetary Policy Committee should consider lowering the federal funds rate, which would reduce financing costs for housing construction and indirectly boost mortgage rates.' However, Powell has yet to take action. Currently, everyone's attention is focused on the Fed's next policy meeting, with increasing expectations of interest rate cuts.
This week, the U.S. Census Bureau will release data on new home starts and permit applications for July. The outlook is not optimistic. In June, single-family home starts fell to their lowest level in 11 months, and permit applications also dropped to their lowest level in over two years. Economists told Reuters they expect little improvement in July's data.