Kevin Warsh’s first decision as chairman of the Federal Reserve kept interest rates steady. The Fed’s rate holding pattern is consistent throughout 2026; the last rate cut was in December 2025.
Warsh and the board affirmed that despite geopolitical uncertainty and a rise in inflation, the U.S. economy holds strong, with the unemployment rate largely unchanged and consumer spending up 0.09% in May.
For housing and construction, employment is up year over year and a major housing bill is set to move towards signing.
“Despite ongoing pressure on the Fed to ease ahead of the midterms, inflation remains the primary driver of policy decisions,” said Dr. Selma Hepp, Chief Economist for Cotality and regular contributor to Builder & Developer. “While we expect administrative focus to zero in on housing affordability again—likely through increased incentives as sales continue to disappoint—elevated costs and borrowing rates will persist. Importantly, regardless of Fed action, mortgage rates are unlikely to fall meaningfully until inflation cools and long-term yields move decisively lower.”
“Overall, the June meeting pivoted the Fed to a notably more hawkish bias, reflecting an increase in current inflationary challenges,” said the National Association of Home Builders Chief Economist Robert Dietz. “Without relief from underlying causes of inflation, Fed policy action will not aid the housing and building market in the near term. However, there are dovish or disinflationary possibilities in the outlook, from resolution of geopolitical headline risks or benefits from productivity growth.”
