【Epoch Times November 17, 2025】 On November 2, 2025, US Treasury Secretary Scott Bessent publicly criticized the Federal Reserve for its continuous high-interest rate policy, stating that it has put substantial pressure on the US real estate market. He called for faster rate cuts to ease the pressure caused by high-interest rates on the housing market and household finances.
Over the past two years, the 30-year fixed mortgage rates in the US have remained high at 6%–7.5%, doubling from the low point of around 2.9% during the pandemic. The surge in interest rates has significantly increased the cost of buying a home, squeezing the affordability of first-time homebuyers.
At the same time, there has been a stalemate on the supply side. Many homeowners hold low-interest mortgages at 2%–3% and are reluctant to sell and move in a high-interest rate environment. As a result, the active housing supply in the US from 2024 to 2025 is still about 10%–20% lower compared to pre-pandemic levels. The simultaneous tightening of both supply and demand has created a frozen situation in the market where prices do not drop, but transactions are unable to pick up.
This stagnant housing market in a high-interest rate environment is becoming a key test of the resilience of the US economy.
Looking back over the past five years, the US housing market can be described as a rollercoaster ride. From the ultra-low interest rates and nationwide housing frenzy during the pandemic in 2020 to the liquidity tightening era of high-interest rates post-2023, the role of the US housing market has quietly shifted from being an engine driving the economy to becoming a burden on households and businesses.
In the spring of 2020, the Federal Reserve lowered interest rates to 0%–0.25% and initiated massive quantitative easing (QE). The 30-year fixed mortgage rates dropped to a historic low of 2.65% in 2021. The decline in home buying costs sparked a buying frenzy across the US, leading to population migration and a boom in short-term rentals. From 2020 to 2022, the average housing prices in the US increased by around 40%, with cities like Phoenix, Austin, and Miami seeing price surges exceeding 50%.
During the pandemic, the market was extremely active: in 2021, new home construction reached 1.6 million units, the highest since 2006, and the average time for a typical house to be sold after listing dropped as low as 15 days.
However, with inflation surging to 9.1% in June 2022, reaching a 40-year high, the Federal Reserve quickly shifted to tightening policies. The federal funds rate increased from 0%–0.25% in March 2022 to 5.25%–5.50% within about 16 months. The 30-year fixed mortgage rates approached 8%, significantly suppressing home buying demand. In 2023, existing home sales dropped to about 4.09 million units, the lowest since the mid-1990s; and new home construction decreased from the high of 1.6 million units in 2021 to a range of about 1.3 million to 1.4 million units.
What truly caused the market to stagnate was the large number of homeowners locking in low-interest loans during the pandemic. Many households held long-term loans at 3% or even lower rates, making them unwilling to sell or move, leading to a continued tight supply. Even in 2024–2025, the inventory levels in most regions across the country remained below pre-pandemic levels.
Although inflation has dropped to around 3% from its peak of 9.1%, housing prices have not adjusted accordingly. The mainstream housing price indexes show that housing prices in the US are still 40%–50% higher than pre-pandemic levels, and the high-interest rates have further worsened affordability.
For example, for a middle-class couple with an annual income of $80,000 purchasing a $450,000 home at current rates, the monthly mortgage, property tax, and insurance payments often exceed $3,000, far higher than the traditional affordability ratio.
As of 2025, the US housing market is showing signs of high prices, stalling transactions, and diminished liquidity. Prices have not fallen, but liquidity has significantly decreased, becoming one of the most prominent economic pressures in the current high-interest rate environment.
On November 2, US Treasury Secretary Bessent, in an interview with CNN, made rare direct criticisms of the Federal Reserve, stating that long-term high-interest rates are pressing on the real estate market and urging for faster rate cuts. He mentioned that while the macroeconomy still shows resilience, the US real estate sector has actually entered a recession, with low-end consumers being the most affected as they are more debtors than asset holders.
He further stated that in the transmission process of monetary tightening, the Federal Reserve may have overlooked the sensitivity of the housing market to high-interest rates. The high mortgage rates have become a major factor suppressing demand. While Bessent did not elaborate on the mechanisms, the market generally believes that the high rates are limiting household refinancing and moving possibilities, restraining residential construction activities, and potentially dragging down local economies. In other words, the current weakness in the housing market appears more like direct demand suppression from monetary policy, rather than from structural shortages on the supply side.
According to data from the National Association of Realtors (NAR), the inventory of homes for sale in the US was nearly unchanged compared to the previous month in September, indicating that there has not been a significant improvement on the supply side. Bessent described the current economy as being in a “transitional period,” and his statements have once again brought focus to the differences in rate cut pace between the White House and the Federal Reserve.
Federal Reserve Chairman Jerome Powell hinted previously that the December meeting “may not necessarily lead to further rate cuts,” a statement that was immediately criticized publicly by Bessent and some officials from the Trump administration. They believe that given the evident pressure high-interest rates have put on the housing market, the Federal Reserve appears too cautious in easing policies.
Federal Reserve Board member Stephen Miran also issued warnings. Miran officially joined the Federal Reserve Board in September. The Federal Reserve had cut rates by 25 basis points in both the September and October meetings, but Miran advocated for larger cuts and voted against the decisions each time. He stated that if monetary policy were to remain so tight for an extended period, the policy itself could potentially be the cause of triggering an economic recession.
Bessent expressed similar views. He mentioned that the Trump administration’s reduction in government spending had reduced the deficit-to-GDP ratio from 6.4% to 5.9%, aiding in lowering inflation; if inflation is indeed decreasing, the Federal Reserve should adjust by more aggressively cutting rates.
He emphasized, “If we are cutting spending, then I think inflation will come down. If inflation is coming down, then the Fed should cut rates.”
Going into 2025, the US housing market has visibly cooled down. According to Zillow, a leading online real estate platform, as of October, the annual average home price growth rate was only about 0.1%, nearly stagnant in comparison to the double-digit growth during the pandemic. While there hasn’t been a significant decline in housing prices nationwide, the regional differences have intensified: markets that surged excessively during the pandemic, such as Austin and Phoenix, have seen slight pullbacks; however, in areas where supply remains tight, the magnitude of price adjustments is still limited.
Transaction volume continues to be at low levels. Zillow projects existing home sales to be around 4.07 million units in 2025, showing only a slight improvement from the previous year. High mortgage rates remain a source of pressure; with 30-year fixed rates holding in the range of 6%–7%, the affordability of first-time homebuyers is limited, and many homeowners with low-rate mortgages have reduced willingness to sell, further contributing to the market’s supply stagnation.
Building activities are displaying a mixed trend. Some Southern and Midwestern states have seen increases in starts due to population influx and lower land costs, while coastal metropolitan areas remain sluggish due to cost pressures and weak demand. According to the Harvard Joint Center for Housing Studies’ 2025 report, the majority of markets in the US still have inventory levels below pre-pandemic levels, reflecting structural inadequacies on the supply side.
The rental market is entering a slowdown phase. Rental growth rates have noticeably cooled off in comparison to the previous two years, with some major cities seeing a slight rise in vacancy rates, indicating that some households are opting to delay home purchases. This trend is also prompting some investors to increase multi-family housing allocations to find assets with relatively stable demand.
Overall, the US housing market has entered a phase of “high-rate equilibrium”: limited downward pressure on prices, weak transaction volumes, persistent supply constraints, and regional disparities that are accelerating.
Market researchers generally believe that the US housing market is not heading toward the typical bubble burst scenario but is entering a “structural transition period” dominated by high-interest rates. While price growth has flattened or declined in some areas, there hasn’t been systemic crashes.
Data indicates that as of the third quarter of 2024, more than 55% of outstanding loan rates were below 4%, with over 20% having rates below 3%. This means that many homeowners, even in a better market environment, may choose not to sell, thereby keeping the supply side tight for years to come.
As long as mortgage rates remain above roughly 6%, the threshold for home buying is still higher than the affordable levels of the past few years. Surveys show that many households are delaying marriage, childbirth, and home purchasing plans due to this, indicating that affordability has become a structural limitation on the demand side.
Against the backdrop of being unable to afford homes, the rental market continues to be supported by a rising demand for multi-family housing. New projects such as office-to-residential conversions are being launched in many areas, becoming the focus of policy and investment.
From a geographic perspective, states with more abundant land supply, lower tax burdens, and net population inflows, such as Texas, Tennessee, and North Carolina, are still attracting continuous corporate and residential relocations. In contrast, high-cost coastal cities are constrained by higher capital costs and out-migration pressures, potentially leading to a slower housing market recovery.
Returning to Bessent’s warning in early November, while his criticisms were sharp, they pointed out the core dilemma in the current US housing market: people who want to buy cannot afford due to high prices and rates, while those who want to sell are unwilling to move to avoid higher borrowing costs given their low-rate loans. Over the past two years, the housing market has cooled gradually under the weight of high-interest rates, yet prices have not seen significant corrections but instead remain in a difficult-to-progress state.
As the year 2026 approaches, the US housing market is still at a policy turning point: if rate cuts can reignite demand, the market may break out of stagnation; however, if rates remain high for an extended period, the housing market may continue to move at a slow pace. This tug-of-war surrounding interest rates and housing affordability will ultimately be a critical test to determine whether the US economy can navigate through the high-rate cycle.