Talk of a recession in the housing market isn’t exactly anything new — industry titan Gary Keller has been talking about it since at least early 2024.
But Treasury Secretary Scott Bessent is now also making the claim that the housing market is in the midst of a recession — while blaming the Federal Reserve.
“I think that we are in good shape, but I think that there are sectors of the economy that are in recession,” Bessent said on CNN’s State of the Union on Sunday. “And the Fed has caused a lot of distributional problems with their policies.”
Bessent added that the Trump administration had worked to lower the deficit-to-gross-domestic-product ratio from 6.4 percent to 5.9 percent by way of government cuts, which should help push down inflation. But he blamed the Fed for not bringing down interest rates quickly enough.
“We’ve seen the biggest hindrance for housing here [is] mortgage rates. So if the Fed brings down mortgage rates, then they can end this housing recession,” Bessent continued. “Low-end consumers who have gotten killed under President Biden, the high rates are hurting them because they have debt, not assets. So I think there are sections of the economy that could go into recession.”
Federal Reserve Governor Stephen Miran also said last week in an interview with The New York Times that the central bank could risk a recession if it did not lower interest rates quickly, suggesting it should do so by half a percentage point at its final meeting this year.
“If you keep policy this tight for a long period of time, then you run the risk that monetary policy itself is inducing a recession,” Miran said. “I don’t see a reason to run that risk if I’m not concerned about inflation on the upside.”
Federal Reserve policymakers cut short-term interest rates for the second time this year on Oct. 29, but a warning from Fed Chair Jerome Powell that another rate cut in December is not a done deal has put upward pressure on mortgage rates.
Powell said that with inflation now moving away from the Fed’s 2 percent target, “there were strongly differing views” about whether to cut short-term rates again in December.
Miran, a Trump appointee, held out for a bigger rate cut of 1/2 a percentage point at last week’s meeting. But Kansas City Fed President Jeffrey Schmid argued that short-term rates are already low enough, and voted against dropping the federal funds overnight rate to its current target of 3.75 percent to 4 percent.
Federal Reserve Bank of Chicago President Austan Goolsbee, who joined the majority of Fed policymakers in voting to cut short-term rates in September and October, told Yahoo Finance Monday that inflation data remains “worrying” and that he is “uneasy with frontloading rate cuts.”
The Fed doesn’t have direct control over mortgage rates, which climbed at the end of last year even as the Fed brought short-term rates down by a full percentage point.
The CME FedWatch Tool, which tracks futures markets to gauge the probability of future Fed moves, on Monday put the odds of another Fed rate cut on Dec. 10 at 65 percent, down from 94 percent on Oct. 27.
Recession risk in the broader economy can vary state to state or region to region, as can housing market conditions. In late August, Moody’s Chief Economist Mark Zandi said in a post on X that nearly one third of U.S. state GDPs were either in or at high-risk of recession, while one third were holding steady and another third of GDPs were growing.
State-level data makes it clear why the U.S. economy is on the edge of recession. Based on my assessment of various data, states making up nearly a third of U.S. GDP are either in or at high risk of recession, another third are just holding steady, and the remaining third are… pic.twitter.com/DXPzn7GOrb
— Mark Zandi (@Markzandi) August 24, 2025
Meanwhile, 15 percent of homebuyers canceled contracts in September, according to a Redfin report, which was 13.6 percent higher than the year before. Buyers in Texas and Florida were most likely to cancel purchase agreements, with buyers in Tampa leading the way at 20.1 percent of contracts.
Buyers cited typical reasons for canceling contracts, including disagreements over pricing or repairs, but some also cited concerns over the current state of the economy.
In another signal of a stalled housing market, pending home sales were also flat in September, according to a report from the National Association of Realtors.
