What the July Fed Meeting Means For Housing

Q: Everyone is talking about last week’s Fed meeting. How do you think what happened at the meeting will affect housing? Jared, Bloomfield, NJ

A: The Fed open market committee, which makes decisions regarding interest rates, met last week on July 30th and July 31st. Many people were anticipating a move to cut interest rates which have been constant for about a year. There was no rate cut last week and Fed Chair, Jerome Powell said that 2 conditions would have to be met before interest rates would be cut: 1) labor market conditions would have to continue to slow 2) inflation would have to continue to moderate. The latest jobs report came in after July’s Fed meeting that showed unemployment increased from 4.1% to 4.3% . Economic data since May of 2024 has come in below expectations. Regarding the impact of the meeting on housing, the Fed doesn’t set mortgage interest rates directly. The Fed sets the federal funds rate, which impacts short-term and variable interest rates and can influence mortgage interest rates. Other factors affect mortgage rates like price inflation as well as supply and demand. The Fed’s monetary policy can increase or decrease interest rates which affect mortgage interest rates but only indirectly. Thanks for your question, Jared.

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