After a very short break that lasted four days, president Trump has continued with his public insults of Federal Reserve Chair Jerome Powell on Tuesday night, blasting him over what he called the destruction of the U.S. housing market.
Writing on Truth Social, Trump said:
The post landed as housing data continues to show cracks, and building sentiment slumps across the country. Despite a small jump in home construction last month, builder confidence has fallen again, mortgage rates remain high, and incentives are being thrown around like candy.
Economists see no improvement in sight, and Trump, now in his second term in the White House, is placing the blame directly on Powell for delaying rate cuts that he believes are long overdue.
Homebuilders slash prices as demand stays weak
Last month, housing starts in the U.S. increased by 5.2%, reaching an annualized rate of 1.43 million homes. This is the highest figure in five months and was driven mostly by a rise in multifamily project construction. Still, the mood among homebuilders is in the gutter. The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 32 in August, the lowest level since December 2022, down from 33 in July. Economists had expected it to move up to 34.
The drop reflects deep concerns about affordability and buyer hesitation. NAHB Chairman Buddy Hughes, who builds homes in Lexington, North Carolina, said, “Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward.” Hughes also pointed to long-standing issues developers face with land regulation and other construction-related red tape.
Conditions have forced over a third of homebuilders to cut prices, with the average cut landing at 5%. On top of that, 66% of firms are offering sales incentives—the highest since the pandemic. Buyers are hard to find, and those who are interested are holding off until interest rates come down. Meanwhile, builder optimism about future sales hasn’t budged, and current sales conditions have worsened.
Regionally, the Northeast saw confidence nosedive to the lowest point since January 2023. Sentiment in the South and Midwest stayed flat, while the West saw only a small improvement. Buyer foot traffic, though slightly higher than May, remains weak overall.
Mortgage rates fall slightly but pressure builds on Powell
The 30-year fixed-rate mortgage fell to 6.58% last week. That’s the lowest since October, and almost half a percentage point lower than where it stood at the start of this year. But this drop hasn’t been enough to shift the market. Buyers are still waiting, and builders are still bleeding.
Robert Dietz, Chief Economist at NAHB, said, “Given a slowing housing market and other recent economic data, the Fed’s monetary policy committee should return to lowering the federal funds rate, which will reduce financing costs for housing construction and indirectly help mortgage interest rates.” But Powell hasn’t moved. All eyes are now on the Fed’s next policy meeting, where expectations for a cut are growing louder.
This week, the Census Bureau is set to release July data on new home groundbreakings and permit filings. The outlook doesn’t look promising. In June, single-family housing starts dropped to an 11-month low, and permits fell to the lowest level in over two years. Economists told Reuters they don’t expect much better from July’s numbers.
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Source: https://www.cryptopolitan.com/trump-fed-powell-destroying-housing-market/
