U.S. Housing Slump Deepens Amid High Mortgage Rates, Fed Holds Steady

The U.S. housing market is experiencing a significant downturn with housing starts and permits hitting near-record lows due to high mortgage rates, tariffs from the Trump administration, and affordability challenges. Mortgage rates remain elevated in the high 6% range, which has suppressed demand, though some buyers, including first-time buyers, are gradually entering the market as they adjust to the new norm. This prolonged slump impacts not only construction and real estate sectors but also broader economic activity, including consumer spending and employment. President Trump criticized the Federal Reserve's interest rate policies on Truth Social, blaming them for choking the housing market and calling for a rate reduction to save trillions in interest costs, a statement that could increase volatility in housing and financial stocks. Despite challenges, mortgage applications and buyer interest show some resilience, suggesting a cautious optimism if rates eventually decline. The combination of these factors is reshaping fixed income strategies and signaling a potential prolonged period of Federal Reserve inaction.