During his first press conference as Fed Chair, Kevin Warsh was asked about the stance of monetary policy: is the Fed restrictive or not? He wisely answered that the answer to that question is “nuanced” and pointed to housing as a sector where current interest rates are clearly restrictive. Data evidence supporting that assessment is overwhelming; housing is struggling, both on the demand and the supply side. And so, despite a persistent, structural housing shortage, supply isn’t growing, sales activity is weak, and prices are soft.
Case in point, existing home sales dropped 2.4% MoM in June. They were up just 2.8% YoY, having hovered in a narrow range close to historical lows for the last several years. Following the initial post-Covid surge, price appreciation has been modest of late. During the first half of 2026, the median sales price of an existing family home only rose 0.8% YoY; there has been a modest but visible uptick in May-June, but this remains a market under considerable pressure from affordability constraints.
Housing is not the whole economy, but it does matter more than its direct investment share might suggest. As the Fed ponders its next move, this is a sector reminding policymakers of that golden rule: “first, do no harm”…
