Fed Rate Cut, inflation, complicate U.S. housing market outlook

Fed Cuts Key Rate for Second Time: The FOMC lowered the benchmark federal funds rate by 25 basis points to a range of 3.75% to 4.00%, marking the second consecutive rate reduction this year. The Mortgage Reports

Mortgage Rate Reaction: The 30-year fixed mortgage rate (recently near 6.26%) may see further modest declines, but experts warn future movement will depend on new data, as the cut was largely anticipated. CBS News

QT Program Ends: The Fed also announced it will soon end its Quantitative Tightening (QT) program—the reduction of its bond holdings—a move intended to ease strains in short-term borrowing markets. Federal Reserve Board

Refinance Activity Jumps: Mortgage application volume saw a 7.1% week-over-week improvement, driven largely by a surge in conventional refinance applications as rates have recently dipped to their lowest level in a year. National Mortgage Professional

Lending Rebound Forecast: The Mortgage Bankers Association (MBA) forecasts a 24% jump in commercial and multifamily mortgage originations for 2026, fueled by the easing rate environment. CRE Daily

Builder Confidence Jumps: The NAHB/Wells Fargo HMI saw a solid gain in October, with the gauge for future sales conditions crossing the 50-point optimism mark for the first time since January. NAHB

Increased Incentives: The average price reduction offered by builders increased to 6% in October, alongside incentives like rate buydowns, as 38% of builders reported cutting prices. NAHB

Focus on New Supply: President Trump publicly called on major homebuilders to significantly boost construction to alleviate the national housing shortage and lower overall housing costs. Churchill Mortgage

Multifamily Cost Headwinds: Construction of multifamily properties is being delayed across the country due to mounting supply-side costs and rapidly rising property insurance rates. CRE Daily

Alternative Housing Trend: "Barndominiums" (steel-framed, barn-style homes) are gaining popularity as a faster, more affordable, and customizable construction alternative. Churchill Mortgage

Fed Cites Labor Market Risk: The Fed's decision was driven by concerns that risks to employment have risen in recent months, marking a clear pivot to supporting the softening job market despite elevated inflation. The Guardian

Fed Dissents Highlight Division: The rate cut decision saw two dissents: one official argued for a larger 50-basis point cut, while another preferred no change, highlighting deep division within the committee. National Mortgage Professional

Bipartisan Housing Bill: The "ROAD to Housing Act" passed the Senate 77-20 amid the shutdown, aiming to boost supply, cut red tape, and expand mortgage access to improve affordability. Churchill Mortgage

Data Blind Spot: The Fed confirmed that the ongoing government shutdown has complicated its view of the economy by suspending the release of key official data on jobs and consumer spending. The Washington Post

FICO Policy Shift: A new FICO program that bypasses credit bureaus to provide a direct mortgage score is poised to streamline the lending qualification process. Mortgage News Daily

Regional Price Split: The market shows a stark split: Northeast and Midwest metros maintain tight supply and steady price gains, while many South and West metros are seeing prices flatten or decline. Cotality

DFW Ascends: Dallas/Fort Worth has become the new preferred market for investment and development, overtaking previous Sun Belt leaders like Nashville and Phoenix in major real estate trend outlooks. PwC

New Buyer Protection: A new service is being offered in high-cost California markets to protect homebuyers against a drop in home value after purchase, reflecting market anxiety. Fox Business

Inventory Boost in Southwest: Markets in Texas (Austin, San Antonio) and Arizona have seen significant inventory increases, with Phoenix's housing supply nearing parity with population growth. Churchill Mortgage

Urban Revitalization: Commercial real estate reports signal a Midtown Manhattan revival and a recovery of Chicago's Magnificent Mile, a positive sign for surrounding local markets. CRE Daily

Buyer Negotiation Power: Analysts estimate there are now over 500,000 more sellers than buyers in the market, the largest gap on record, which is translating directly into higher instances of price cuts and concessions. Charlie Bilello's Blog

Price Cut Volume: Nearly 20% of all listings (19.9%) saw a price cut in September, with homes in the mid-range ($350k–$500k) feeling the most pressure from slowing demand. Churchill Mortgage

Investor Dominance: Investors are driving a market shift, accounting for the highest share (30%) of single-family home purchases on record, often filling the gap left by sidelined traditional buyers. CRE Daily

Tenant Union Movement: Over 1,000 renters are coordinating the first-ever nationwide tenant union effort against a private equity landlord, signaling a major new dynamic in rental housing. Wolfnest

"Golden Handcuffs" Effect: The vast majority of homeowners with low locked-in mortgage rates are reluctant to sell, which continues to restrict the supply of existing homes and prolong the market stagnation. Realtor.com