Housing Affordability and the Federal Reserve’s Interest Rate Cut
The Federal Reserve has announced a cut in interest rates, which may have a significant impact on the housing market. With housing affordability squeezing buyers, a new survey is revealing that some homebuyers are feeling discouraged.
Homebuyers Giving Up, Survey Finds
Bankrate published its 2025 Aspiring Home Buyers Survey, which surveyed more than 2,300 adults last month. The data found that one in six (16%) of aspiring homebuyers have given up on purchasing a home in the past five years because they could not find anything they liked or could afford. Meanwhile, 28% of aspiring homeowners said the price of a home in their area was the most important issue when deciding whether to purchase a home.
Key Findings from the Survey
The survey found that millennials buyers were the most likely generation to have given up on purchasing a home in the last five years because they couldn’t find anything they liked or could afford (22%), followed by Gen Xers at 17%. When asked about what the important issues were for determining their interest in buying a home, aspiring homeowners were most likely to point to the cost of homes in the area (28%) followed by the amount in their savings (16%), job situation (16%), an interest in staying in the same area long term (14%) and personal relationships (4%).
An ‘Open House’ sign is posted near a single family home for sale on August 22, 2025 in Pasadena, California. Sales of existing homes rose slightly in July in the United States following a modest decrease in mortgage interest rates. (Credit: Mario Ta
Affordability is at its Worst Level in Decades, Financial Analyst Says
“U.S. home affordability is at its worst level in decades,” said Stephen Kates, a financial analyst at Bankrate. “The punishing combination of high home prices, low supply and high mortgage rates has caused one in six home shoppers over the past five years to give up completely.” Benjamin Clark, broker-owner of Buyer Representation in Salt Lake City, Utah, and president of the National Association of Exclusive Buyer Agents, agreed. “Prices have gone up significantly since COVID,” he said, adding, “Interest rates have gone up significantly since COVID. And buyers’ incomes have not necessarily gone up.”
Feds Cut Key Interest Rate
The Federal Reserve cut its key interest rate by a quarter-point earlier this month and indicated that two more cuts could follow before the end of the year. Fed officials also signaled that they expect to reduce their key rate twice more this year, but just once in 2026. Among aspiring homeowners, the data found that just 7% said they were actively shopping for a home. Gen Zers were the most likely to be shopping for a home, with 9% doing so, followed by millennials and Gen Xers at 7% and baby boomers at 5%.
Impact of the Interest Rate Cut on Homebuyers
The cut in interest rates may have a positive impact on homebuyers, as it could lead to lower mortgage rates and increased affordability. However, the survey found that many homebuyers are still feeling discouraged, and the affordability crisis is far from over. The source of the information for this story was provided by Bankrate, which surveyed more than 2,300 adults from Aug. 13-15, 2025. The survey was carried out online. This story was reported from Los Angeles.
Conclusion
In conclusion, the housing affordability crisis is a complex issue that requires a multifaceted solution. The Federal Reserve’s interest rate cut is a step in the right direction, but more needs to be done to address the root causes of the crisis. Homebuyers are feeling discouraged, and the survey findings suggest that many are giving up on their dreams of owning a home. It is essential to continue monitoring the situation and exploring solutions to make housing more affordable for all.
Frequently Asked Questions
Q: What is the current state of housing affordability in the US?
A: Housing affordability is at its worst level in decades, with high home prices, low supply, and high mortgage rates causing many homebuyers to give up on their dreams of owning a home.
Q: What is the impact of the Federal Reserve’s interest rate cut on homebuyers?
A: The cut in interest rates may lead to lower mortgage rates and increased affordability, but many homebuyers are still feeling discouraged, and the affordability crisis is far from over.
Q: What are the key findings from the Bankrate survey?
A: The survey found that one in six aspiring homebuyers have given up on purchasing a home in the past five years, and that millennials are the most likely generation to have given up on buying a home. The survey also found that the cost of homes in the area is the most important issue for determining interest in buying a home.
Q: What can be done to address the housing affordability crisis?
A: A multifaceted solution is required to address the root causes of the crisis, including increasing the supply of affordable housing, reducing mortgage rates, and improving economic conditions for homebuyers.
