APARTMENT ADVOCATE
For the Federal Reserve, the policy interest rate— controlled through the Open Market Operations— is a valuable tool in its approach to maintaining economic stability, alongside the bank’ s discount window and reserve requirements. Dropping the rate too fast in an environment of economic expansion would leave the bank unable to respond by further lowering the rate in case of an economic recession. While the FOMC noted that it is open to lowering the rate in the near term, it does not want to do so too soon and risk refueling price gains. This is one of the main lessons the bank internalized during the inflationary spikes of the late 1970s and early 1980s.
For capital markets, today’ s decision by the Federal Reserve translates into steady interest rates. More specifically, rates for personal and auto loans, as well as credit cards will continue at elevated levels.
Mortgage rates are not dictated by the Fed’ s overnight rate and move in
tandem with longer-term bond yields. The 10-year Treasury has been moving in a narrow band between 4.2 % and 4.5 % most of this year, keeping the 30-year fixed mortgage rate anchored around a 6.8 % average during the first seven months.
For real estate markets, the picture is nuanced as we move into the second half of the year and continue to wrestle with affordability challenges. On the one hand, for-sale inventory has been growing, with over one million homes currently listed on the market. At the same time, home prices have hit new highs, spurred by larger homes dominating listings during the warmer months. For buyers weighing home prices 50 % above 2019 levels, current mortgage rates translate into a $ 2,800 monthly payment on a median-priced home.
On the other hand, rebalanced by a noticeable inflow of new units, the rental market has experienced moderating rents. The median rent
" The median rent across the country hovers around $ 1,800 per month, giving many Americans more affordable options. "
across the country hovers around $ 1,800 per month, giving many Americans more affordable options.
For the Fed, the cost of housing remains a central concern, as it dictates a significant share of inflation metrics. However, bringing the cost of housing down will require more than a change in monetary policy. www. aamdhq. org 37 | TRENDS SEPTEMBER 2025