New: 🧠 Market Minds Issue #102

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Jerome Powell cut rates again. For the second time in a row, the Fed trimmed by 25 basis points, bringing the target range to 3.75% - 4%. But if you were hoping for a roadmap, what Powell delivered was a shrug in a suit. His press conference wasn’t a signal of strength, it was a man admitting he’s driving blind through an economic fog, the same fog hanging over the jerome powell housing market outlook. That, more than the cut, is what matters.

Powell didn't project resolve, he projected confusion. At a time when investors, homebuyers, and markets crave direction, Powell’s core message was: “I don’t know.” The fog of government data blackouts during the shutdown, paired with an economy that’s still digesting pandemic-era dislocations, has left the Fed Chair playing defense. It’s the equivalent of calling a timeout every 30 seconds in a playoff game because the coach can’t see the scoreboard.

Despite the cut, the 10-year Treasury remains above 4%, and the 30-year mortgage rate jumped 14 basis points because markets don’t trade on what Powell did, but what he signaled. And what he signaled was paralysis. This isn't dovish policy, it’s indecision disguised as patience.

Translation: The disconnect between Fed policy and housing finance continues to widen, and it’s exactly why the jerome powell housing market keeps reacting to signals instead of actions. If you're waiting for lower mortgage rates to reignite volume, you'll be waiting in a traffic jam caused by Powell’s blinking hazard lights.

Housing got a 5-second cameo in Powell’s remarks, characterized as “weak.” That’s it. No discussion of demand-supply dynamics, no mention of affordability crises, and certainly no sense of urgency. Powell’s silence was deafening. Meanwhile, services inflation outside of housing is what’s worrying the Fed, meaning that even as housing cools, it's not buying the Fed any slack. Shelter may be stabilizing, but it’s not enough to shift policy or narrative.

Powell downplayed AI-driven investment’s interest-rate sensitivity, but that’s shortsighted. We’re watching capital get rerouted away from housing into data centers and chip plants. While Powell is focused on the fog, tech is building the freeway around him. That shift in capital priorities is a long-term headwind for traditional real estate returns, particularly in markets betting on an industrial renaissance that may never come.

Subprime auto loan delinquencies are climbing, and some of those losses are hitting bank balance sheets. Powell says it’s not systemic. Sound familiar? That’s how housing sounded in 2006. For now, real estate looks more stable, but credit markets are flashing early warnings. When cracks appear in one sector, lenders tend to overcorrect elsewhere. Expect tighter underwriting in Q1 2026.

Don’t misread a rate cut as momentum. The Fed is scared, not strategic. And scared central banks don’t make bold moves, they stall, delay, and hope the market does the work for them.

So don’t build your 2026 playbook on Fed policy. Build it on the assumption that Powell may not know what comes next, and act like you do.

You know the story: mortgage rates are up, home prices have ballooned, and first-time buyers are screwed. But that story’s incomplete. What’s really blowing holes in affordability isn’t the sticker shock of homes or the cost of borrowing, it’s the death-by-a-thousand-cuts happening on borrowers’ balance sheets. Insurance premiums are spiking, consumer debt is mounting, and automated underwriting is quietly tightening its grip, the real mechanics behind the growing homeownership affordability gap. This isn’t just a housing story. It’s a story about shrinking margins, broken assumptions, and a buyer pool that’s getting crushed from every direction.

Premiums are no longer background noise. In Louisiana, homeowners are staring down a $2,974 annual spike, a monthly DTI killer that can knock an otherwise approvable loan into the abyss. Florida and California aren’t far behind. The kicker? These insurance hikes don’t show up on Zillow, but they’re increasingly the dealbreaker.

Automated underwriting systems, DU and LP, used to be reliable gatekeepers. Now? They're turning away borrowers with clean files, nudging them toward FHA loans with higher mortgage insurance and long-term cost drag. Think of this as redlining 2.0, only this time it’s math, not malice.

Experian reports show a surge in consumer debt,  up 30.9% for Gen Z, 5.3% for Millennials. These aren’t irresponsible spenders; they’re just operating in an economy where the cost of existence has outpaced wage growth for over a decade. The result? More debt, higher minimum payments, and less room to qualify for a mortgage. Even with decent incomes, many buyers get clipped by the DTI ceiling.

Since 2019, wages are up 20%. Sounds good. Except home prices in many metros are up 40–60%. That delta has permanently altered the buying landscape. Today’s buyer is earning more and buying less, a cruel inversion of the American Dream.

Take a $100K household. At a 5.25% rate and $350K purchase price, they’re already teetering at 43% DTI. Bump the rate to 5.75%, and it jumps to 44%, still within FHA limits, but with no safety net. Add a couple hundred bucks for higher insurance or student loans, and the loan’s dead. This is the new reality: It’s not about price per square foot, it’s about the sum total of financial gravity pulling against a borrower’s qualifying ratio, the quiet math widening the homeownership affordability gap in real time.

The loudest voices are still talking rates and home prices, but the smart money is already shifting focus. Real leverage now comes from understanding the real affordability matrix, where monthly insurance bills, non-mortgage debt, and underwriting black boxes are the real gatekeepers to homeownership.

The winners in this market aren’t the ones who chase rate dips. They’re the ones who can decode the full affordability algorithm and operate in the margins. Everything else is noise.

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Let’s get the headline out of the way: existing-home sales inched up 1.5% in September to a seasonally adjusted annual rate of 4.06 million. That’s not growth. That’s CPR on a market that’s still slumped over the wheel. We're still hovering around the lowest level since the Great Recession, and this "uptick" isn’t even a sign of stabilization, it’s noise in a downward-trending signal, the opposite of what any hopeful existing home sales forecast 2025 would imply. Think of it like being happy your plane stopped dropping at 30,000 feet … after falling from 40,000.

Housing inventory is up 14% year-over-year. But context matters: it’s still below pre-COVID norms. Why? Homeowners are holding onto 3% mortgage rates like they're rare vinyl records. The result? Fewer forced sales. Distressed inventory is just 2% of the market. Supply isn’t tight because sellers are underwater. It’s tight because they’re sitting on the best financing deal they’ll ever see in their lifetimes. This isn’t a housing crisis. It’s a homeowner standoff.

The median existing-home price rose 2.1% year-over-year to $415,200, the 27th consecutive monthly gain. But this isn’t exuberance. It’s math. The composition of sales is skewed toward higher-end properties as first-time buyers continue to be priced out. Affordability is still a four-letter word, and with mortgage rates only modestly easing, most buyers are stretching, or walking away.

Cash purchases made up 30% of transactions. That’s up from last month and in line with last year. Translation: institutions, boomers, and buyers with no financing contingencies are running the table. The market is being reshaped around liquidity. If you're not showing up with cash, you're bringing a butter knife to a gunfight.

Investor and second-home buyer share fell to 15%, down from 21% just last month. That’s a five-alarm flinch. Short-term cash flow doesn't pencil out anymore, not with rates still elevated and home prices stubborn. This isn’t a pivot. It’s an exit.

The real headline isn’t the 1.5% month-over-month rise. It's the 40% drop from two years ago. This is a new normal. A slow-moving, price-sticky, inventory-constrained standoff where buyers are hesitant, sellers are immobile, and the Fed is everyone’s unseen roommate, a setup that makes any existing home sales forecast 2025 look less like a rebound narrative and more like a warning label.

You’re not crazy to feel like the market is stuck. It is. And until rates meaningfully drop or wages catch up, sales will continue to scrape the bottom of the barrel, with the occasional bounce, like September, that’s more illusion than inflection.

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Cash didn’t blink while everyone else stalled.

In September, cash buyers made up 30% of home transactions, a steady grip in a market down 40% from 2021 levels.

While Powell projected uncertainty and rates stayed elevated, liquidity showed up unbothered, reshaping the housing game around speed, certainty, and no contingencies.

The rules haven’t changed. Just who’s winning.

Jerome Powell didn’t just cut rates, he pulled the emergency brake on a car that’s already hydroplaning. The Fed’s latest move doesn’t signal momentum, it screams uncertainty. Mortgage rates are reacting not to policy, but to Powell’s verbal shrug. Translation: don’t expect housing to bounce back just because the Fed blinked. When leadership starts “strategic stalling,” smart operators pivot from Fed watching to margin watching. Real estate pros need to stop waiting for rate relief and start mastering affordability constraints, insurance, debt loads, algorithmic gatekeeping. Because Powell’s fog isn’t lifting anytime soon, and in the meantime, cash, context, and clarity will win deals.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team

The content of Market Minds is provided for informational purposes only and reflects personal opinions based on sources believed to be reliable. It does not constitute financial, investment, legal, or professional advice. Each reader is solely responsible for their own decisions.